For many small business owners, bank loans and other traditional mortgage sources are not an option. Past credit issues, smaller loan amounts and income verification issues are among the reasons that these borrowers are sometimes unable to qualify for a commercial mortgage at their local bank. However, they’ll still need financing, and brokers would do well to consider working with these borrowers.
Here’s how helping small business owners find the mortgage they need can expand your business and help you earn more:
There’s less competition for brokers.
Compared to the residential and large-balance commercial mortgage markets, the small-balance niche is generally under served. Because there are plenty of borrowers who need alternative commercial property financing and fewer brokers working with them, there are many opportunities to close loans should you decide to work with these borrowers.
The loans close more quickly.
Because of stricter regulations, it takes longer for bank loans to close whether they are residential or commercial mortgages. The small-balance commercial mortgage industry is less regulated, so lenders can underwrite, process and close loans within a matter of weeks instead of within a few months.
You can make larger commissions.
Again, because of industry regulations, brokers closing bank loans are much more limited to the fees they can charge borrowers. Most non-conforming commercial lenders have a fee cap, but it’s generally higher than a bank’s. For example, brokers working with APEX Mortgage can charge up to 5 points per deal as well as an additional 2 YSP.
Brokers looking to earn more should consider closing commercial mortgages for small business owners. Non-bankable borrowers often need the expertise of a broker to find the right alternative financing source, and because fewer brokers operate within the niche you’ll have plenty of options. Additionally, these loans tend to close fast and you can make more on each deal. These loans are a great way to expand your business and increase your income.