Small Commercial Mortgages – Current Options

Borrowers with small commercial mortgage requests have limited options as many banks, lenders and commercial mortgage brokers will not consider working on or reviewing these smaller deals. The primary issue is that there just isn’t enough money in them to make it worthwhile for these professionals. Also, many smaller commercial mortgages turn out to be more difficult to get done and can be more work than larger commercial loan request, with the bigger pay day.So if you’re a borrower with a loan amount less than $500,000 what are your options? Number one, is get ready to play “ball”. Most banks, if they’re going to compete over a $300,000 commercial mortgage, for example, will want spin off business. For example they will certainly want deposits both in the form of checking and saving accounts. It’s not uncommon for them to ask for personal checking and savings as well. And the bank will be very interested in providing benefits to your employees, like insurance and 401k plans among other spin offs type products.You may have other options however besides just the local bank. And, their commercial mortgage options maybe undesirable as they often only offer 5 year fixed with 20 year amortization type loan structures. For example, there are still banks and lenders out there with non depository set ups that are only interested in writing your commercial mortgage. Again most of these groups only look at deals greater than $500,000 but there are roughly 10, maybe 20 national banks that want your smaller commercial mortgage. Some will go down to $200,000 a few even lower.The key here is to know where to look and where to find these banks that are actively marketing towards these lower loan amounts. And you want to make sure the contact person you’re working with is interested in doing the deal as well. If not, the process will be dragged out as your request will be ignored and neglected at the bottom of the “pile.”It’s interesting to note though that there are still some creative options out there for these smaller loan requests. For example we work with a bank that has a program geared towards loans under $500,000 and that they pay for all of the third party reports to do the loan.