Key Points for Non-conforming Commercial Loan Requests

Choosing the right loan for a nonbankable commercial borrower

A hard money loan helps borrowers with credit or seasoning issues;

Hard money also comes with higher interest rates and closing costs; 

The quick-close characteristics of hard money may be worth the extra costs;

Nonconforming commercial lenders can offer financing alternatives that fall between bank and hard money loans;

Nonconforming commercial lenders can work with some credit issues and their loans don’t include balloon payments like hard money loans; and

Refinancing to an alternative nonconforming commercial mortgage can be a good exit strategy for a hard money loan.

Commercial mortgages from nonconforming lenders also can function as an exit strategy for borrowers who currently have a hard money loan. 

Once the borrower has reestablished a positive payment history and improved their credit, they’re more likely to qualify for one of these in-between loans with a private lender. 

Refinancing a hard money loan with an alternative small-balance commercial mortgage will put your borrower on more secure financial footing.

Although there are some commercial borrowers who will require hard money financing, there are nonconforming lenders with alternative products that will be a better fit for some of your clients. 

You as a commercial broker, it’s important to be able to distinguish when a hard money loan will be the best fit and when your client can qualify for something in between a bank loan and hard money. 

Understanding your nonbankable borrowers and the type of commercial mortgage that suits their needs will allow you to place deals with the right lenders, which in turn will lead to more closed loans and additional broker income.

VII Capital Funds can help you through the hurdles and quicksand of processes that are expunging the marketplace.

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