If you’re a broker and you’re ignoring commercial mortgages entirely, you’re losing out on a lot of business. Last year closed out strong, according to the Mortgage Bankers Association, and they’re projecting that 2020 is going to look even better.
If you don’t want to leave money on the table, focusing some of your efforts on borrowers who need a mortgage for their business or commercial property investment is in your best interest.
A great place to begin is small-balance commercial mortgages for non-bankable borrowers. You generally have the opportunity to earn more in this space than you would closing bankable deals, and many lenders operating in this niche make an effort to make the process as simple as possible for their brokers. And if you’re not sure where to start, lenders like APEX can help.
Where can brokers find borrowers seeking business mortgage loans?
There are small business owners and commercial property investors all over the country looking to take out a commercial mortgage, but who won’t be able to go to their local bank, including right in your own backyard. You just need to know where to look.
Referral sources are going to be crucial to your success as a commercial mortgage broker. Some typical sources for business mortgage loans include bankers who cannot fund a deal, but are looking to help out a customer and save the banking relationship, CPAs who have a deep understanding of their clients’ financial situations and know exactly who won’t be able to qualify for a bank loan, and realtors looking to close the sale of a commercial property.
You’ve also got the internet at your disposal, and this can help you connect with both potential referral sources and borrowers in need of business mortgage loans. Post regularly about your services and how you’ve helped your clients. Join groups dedicated to small business owners and commercial property investors and let them know you can help them obtain the financing they need to achiever their goals.
Another good approach is to get out there and get to know local small business owners. Talk a walk through your city or town’s business district and bring along your business cards or some fliers. Stop in for a quick visit and let them know that you’re in the area and available if they’re ever in the market for a business mortgage loan.
How can brokers make sure to choose the right commercial mortgage lender for these scenarios?
The simplest way to make sure that you’re placing your borrower’s business mortgage loan request with the best lender for the deal is to learn everything you can about the borrower, the business, and the scenario as early in the process as possible. This is particularly important if your borrower isn’t bankable. Additionally, you should take the time to get to know the lenders with whom you work and their programs.
So what information will you need to determine which of your lenders is the best fit for a given deal? First, find out the basics: how much money your borrower needs, the property type, location, and use, and how they’re planning to use the funds. Next, get a sense of their finances, the business’s finances and their credit history. Find out if they’re looking to pay off debt, and if so, what kind of debt? These are all factors that will help you to decide who should handle the request for a business mortgage loan.
What will I need to submit to begin the process?
That’s going to depend on the lender, and what kind of business mortgage loan your borrower is seeking. You’ll likely need at least an application, a summary of the mortgage request, and a credit report to get started. Some lenders might require financial documents, like a profit and loss statement or an income and expense report, or tax returns depending on how they underwrite the deal. Whether or not they’re required, it’s always a good idea to send property photos to the lender.
Working with borrowers to get them the business mortgage loans they need is a great way for brokers to bring in more business and increase their income. Typically, mortgages for non-bankable borrowers will require less documentation and allow you to charge higher commissions. Some lenders will handle all the processing in addition to underwriting the deal, which will free you up to seek out new business mortgage loan scenarios and earn more.