It’s true. The world of small balance commercial lending is populated by a much wider variety of lenders than is the residential lending world. And with the variety of property types and business needs there can be a lot of program options.
But it’s not as complex as you might think. So, if you’re new to commercial lending and looking for a lender that meets your needs, simply follow the advice here and save some serious time.
Here are three steps to help you quickly find the ideal lender and program for your situation.
Step 1: Identify Your Real Needs
You may know what loan amount you’re looking for and have a specific time frame in mind, but have you actually listed your needs? Getting a firm handle on your situation can be a big help when trying to identify the ideal lender type.
You can start by answering the following questions:
Why do I need this loan? – You obviously know why you need a commercial mortgage, but being able to clearly communicate your need to prospective lenders can help them introduce the programs and options that make the most sense.
Do I want a long-term or short-term solution? – How long do you plan to own the property? Is this a flip or a long-term investment? Do you plan to sell within months, years, or decades?
Do I need to explain my credit history? – Do you have credit blemishes that need to be explained? Different lenders will have different credit requirements, so your credit history will play a large role in the type of lender you can work with and the type of loan you will eventually secure. Remember: a credit blemish won’t necessarily lead to an automatic “no” from a lender – especially if you’re working with a non-traditional alternative.
What is the story with my commercial property? – Does your property have a history that might cause more risk for a lender? Was it ever used for a purpose that might require environmental due diligence? Do you have photos? Has the property been repositioned through a capital improvement program that has created value? Being an expert on your property’s history can be a big help when communicating with lenders.
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