Understanding Small Balance

Very simply, there are more small-balance commercial loan opportunities than there are large-balance ones.

Your revenue doesn’t have to be limited to residential transactions. You can serve all your clients’ needs by expanding your business to offer commercial real estate loans. We can help you realize new revenue opportunities.

Plain and simple — there are more small-balance commercial loan opportunities than there are large-balance ones. Across the United States there are many, many times more properties that fit small-balance lending than large-balance. Also, the owners of small-balance properties tend to get overlooked by the banks and other lenders who like to go elephant hunting for the “big” loans. This means YOU have more opportunity to close loans for $200,000 to $5,000,000 with the clients you are already interacting with.

A small-balance commercial loan considers three factors:

• The property quality and location
• The property’s history and ability to generate cash flow
• The borrowers’ financial strength and experience

Commercial loans aren’t all that different from residential loans. You already know how to serve your clients; throw in some additional information and a few new terms, and you’re good to go.

First, talk to your borrower about their needs and determine their desired goals for a loan. Purchase or refinance? Cash out? Purchase price? Loan balance? You’re used to all that.

Second, gather some information about the borrower and the other parties involved in the ownership of the property. You’re used to that as well.

Third, obtain a property rent roll and an operating statement from your client. That may be new, but it is easy to obtain and your borrower will generally be used to providing the information.

Your revenue doesn’t have to be limited to residential transactions. You can serve all your clients’ needs by expanding your business to offer commercial real estate loans. We can help you realize new revenue opportunities.

• Multifamily
• Retail
• Office
• Industrial
• Mobile Home Park
• Self Storage
• Single Family Residential Pools (5+ units)

Residential brokers who’ve expanded into the commercial market find it easier than they imagined. Who doesn’t want to make more money with less hassle in loan documentation and particularly less government regulation? You’ll have a greater variety of products with more flexibility to offer loans to your clients?