For many small business owners, it’s a real problem when their local bank decides not to renew their commercial mortgage and calls the note due. These borrowers have a limited time frame in which to find financing in order to pay off the note, and they usually require the assistance of a broker.
Here’s what you need to do if a borrower calls you and tells you that the bank won’t renew their loan:
Ask the right questions.
The first thing you should ask the borrower is the bank’s reasoning for not renewing the loan. Sometimes, it’s as simple as the bank wants a certain property type or loans under a certain amount off of their books. Other times, the reason will have to do with a borrower’s credit or issues related to their business. In order to help them to obtain a new commercial mortgage, you need to fully understand their situation and why the bank chose to call their note due.
Find an alternative lender.
There are a number of commercial mortgage lenders who specialize in non-bankable deals. These lenders will be willing to listen to your borrower’s story and will take the time to understand your borrower’s business. It’s important for you as the broker to speak with a number of non-conforming lenders and learn about the types of deals they fund in order to get your borrower the best possible commercial mortgage.
Collect the necessary documents and submit the deal.
Once you’ve established the issues your borrower is facing and have selected the most suitable lender, it’s time to begin gathering the information that the lender needs to begin underwriting the deal. Generally, in order to start the process, your lender will need a summary of the deal, a completed application, a tri-merge credit report with tradelines and photos of your borrower’s property. Each lender has different requirements, so be sure to talk to them about what is needed before you submit a commercial mortgage request.
Commercial borrowers, particularly those who are non-bankable, rely on the expertise of brokers when they need to turn to alternative commercial financing. It’s important for you to understand how to best approach these types of situations in order to solve the borrower’s funding dilemma. Not only will your skills help them, but these satisfied customers will be more likely to recommend your services to borrowers in similar situations.