With so many lending options in today’s commercial mortgage market, it can be difficult to know where to submit your loan request.
The fact is, different lender types are always going to be a better fit for certain borrowers. The best thing a lender can do for you is to clearly communicate the types of deals that meet their requirements or “fit their box.”
Looking for the right commercial lender?
A good way to start the qualification process is to look at two important aspects: your property and your own needs. Here is a quick breakdown of the characteristics to identify as you search for the ideal lender option.
1. The Property Type
Perhaps the easiest way to see if you’re a great match for a lending program is to determine whether the real estate in question is listed as one of their eligible property types. You can most likely find this information somewhere on the lender’s website, though it may also be beneficial to reach out to a loan officer so you can get a better explanation of what fits and what doesn’t.
With the recent addition of 1-4-unit residential buildings, Commercial Direct’s (a division of Silver Hill Funding, LLC) lineup now includes the following property types:
- Light Industrial
- Mobile Home Park
- Daycare Center
- 1-4-unit attached/detached
This list is a comprehensive collection of the most common commercial and multifamily property types in the country. However, the list also includes some property types, like bars and restaurants, that many other commercial lenders avoid.
That brings us to commonly ineligible property types like churches, adult lounges, and funeral parlors. If you’re looking to finance one of these properties, you may be limited to hard money options and other high interest rate alternatives.
To see specific examples of the types of properties Commercial Direct lends on, head over to the Showcase page of our website and scroll through a collection of closed loans.
2. Your Specific Needs
Once you have disqualified certain lenders based on property type eligibility, your next step is to take a close look at your own short and long-term strategy.
To start, take an honest look at your credit history. If you have a high credit score and zero blemishes in your financial history, you may be able to secure financing from a bank. And when you consider the low rates and attractive terms banks offer, that is exactly what many in that position should do.
On the other hand, there are a number of instances where prospective borrowers do not want to work with a bank, even if they are bankable. Consider the self-employed professional who prefers not to go through the hassle of providing tax returns or the investor who needs to close in a matter of weeks, not months.
As an example, Commercial Direct works with a wide range of credit-worthy borrowers, from small-business owners who want to take cash out of their existing commercial mortgage to investors looking to diversify their portfolio by purchasing a duplex property.
These individuals are actually better served by working with a non-bank alternative lender. If that is the case for you, you can save time by eliminating bank options from your search.
The checklist below highlights the initial questions you can ask yourself as you look to find the ideal lender option for your loan request.
- What is your motivation for financing?
- Is there an issue with the property in question that might limit the amount of lenders?
- What is the real estate type and current use of the property?
- How many units (multifamily) and/or what is the occupancy level and tenant mix?
- Does the property require rehab or repositioning?
- Do you have photos of the property?
The Project Objective
- Is the property owner-occupied or an investment?
- What is the expected holding time for the investment?
- Will the ownership entity be individual or corporate?
- If this is a refinance, what is the loan purpose?
Supporting Information and Documentation
- How was the value of the property determined?
- What is the balance on the current mortgage and when is it due?
- Is the history of mortgage payments available?
- Can you provide the most current operating statements and rent roll?
- Are you prepared to provide a credit report?
Want to see if your scenario fits Commercial Direct’s box?
Take the first step by visiting our Loan Customizer and designing the loan that fits your needs.
Zack North is the Director of Marketing for Commercial Direct. As a regular contributor to a number of top industry publications, Zack enjoys writing about topics that help investors and business owners approach commercial mortgage financing with confidence.