Refinance

Borrowers shopping for a small commercial mortgage will discover a few more frustrations than on the typical larger commercial real estate loan. 1. There are limited loan options as many banks/lenders loan minimum are $500,000 with some bank minimums set at $1,000,000. 2. The second component here is that small commercial mortgage request will often just be ignored by industry professionals.

There’s really no difference with underwriting a small commercial mortgages than on a larger one. The same process and amount of work goes into all loan requests. And when we say small commercial mortgage, we’re referring to loans less than $500,000. In addition, these smaller loans can actually have more work tied into them than larger deals.

Small commercial mortgage borrowers often have less experience, are less organized and can be more emotional. All of this simply means more time, effort and work that has to go into these files for the commercial mortgage brokers, loan officers, and industry professionals while at the same time the deals represent less money for them. Many are all too aware of these issues and will simply not work on any deal less than $500,000.

Banks and lenders often set the standards as well. If we where to take a guess at it, only 10% maybe 20% of banks out there will work on loans less than $400,000. Many of them will want spin off business such as deposits, benefits etc to justify the deal. Also, many of the banks that advertise for loans from, for example $100,000 - $5,000,000 will not actually want to work on smaller deals.

So borrowers that are seeking small commercial mortgages will have to pick what loan programs are actually available to them.

Bottom line we have one of the best programs in the nation for loan less than $500,000. Main benefit is that all third party costs are paid for by the bank.

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial real estate loans or small commercial loans.