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Educational articles for Commercial Mortgage Brokers

Why Mortgage Brokers Should Work with Commercial Property Owners

If you’re a broker interested in expanding your product offerings, now is a great time to get into the small-balance commercial mortgage industry. Small business lending in the U.S. continues to grow, according to the Thompson Reuters/PayNet Small Business Lending Index (SBLI). The SBLI increased by 9% from 131.0 in May 2015 to 143.3 in June of 2015, reaching a new high. The SBLI is up 19% year-over-year.

“The small business economy is leading the charge for growth within an overall economic environment of slow progress that has defined the current expansion,” said William Phelan, president of PayNet. “Strong financial health means small businesses will find easier access to credit and more of them will find borrowing needs met.”

While some commercial property owners might find getting a bank loan simpler, there are still plenty of borrowers who cannot obtain traditional financing for their properties. Once you’ve decided to work with these borrowers and develop a relationship with a small-balance commercial lender, you can begin submitting loans. Each lender will have their own requirements, but here are three basics you’ll always need to get started:

  • Executive loan summary:

    A clear, concise executive summary of the deal goes a long way. Include information about your borrower, the property and how your borrower plans to use the funds.

  • Application:

    Whether it’s a 1003, personal financial statement or commercial loan application, be sure to provide your lender with an application. Include all relevant property and borrower information.

  • Credit:

    Your borrower’s credit history will be an important component in any lender’s decision to finance. Be sure to include a recent credit report and a credit explanation if necessary.

As the economy continues to improve and small businesses continue to grow, it’s important for mortgage brokers to consider closing more small-balance commercial loans. Working with non-bankable borrowers is a great way to expand your services, as well as earn additional income.

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