How to Quickly Close Commercial Loans


3 Commercial Lending Tips (Plus 1 Bonus) to Ensure a Speedier Transaction Process for your Clients

Many small-business owners and investors looking for a small-balance commercial mortgage are under significant time restraints – they need to act fast to secure a purchase or take out their short-term loan before the balloon payment comes due. Unfortunately, borrowers who partner with traditional banks can wait as long as 60-90 days while their transaction passes through loan committees and other forms of commercial lending red tape.

On the other hand, a non-bank alternative like Silver Hill Funding takes advantage of an experienced team and streamlined transaction process to regularly close and fund loans in 20-30 days. With some help from the transacting broker and borrower, the team can close in an even shorter amount of time.

If the broker and borrower do their homework before the transaction begins and maintain a focus on speed throughout the process, they can drastically reduce the length of a commercial mortgage transaction. Incorporate these 3 tips into your business practices to expedite the transaction process and get your client the funding they need — fast.

1. Look for Multifamily and Mixed-Use Opportunities

While any type of small-balance commercial mortgage transaction will generally close in a shorter amount of time than a large-scale deal, small-balance transactions that involve certain property types are likely to close faster and more easily than others. If you’re looking to grow your business by closing a few small-balance deals in rapid succession, consider focusing on multifamily and mixed-use properties.

These types of low-risk deals more closely resemble residential transactions and are therefore easier to close in a short amount of time. While some property types, like automotive repair shops, involve environmental concerns and other risks, multifamily and mixed-use deals are generally straightforward transactions that produce fewer delays.

Of course, if you’re looking to grow your business you may not want to limit yourself to just these types of transactions. And certain lenders – especially of the non-bank variety – specialize in closing some of the more difficult types of deals. But when it comes to speed and ease, your best bets are going to be those transactions that have the most in common with traditional residential mortgages.

2. Come Prepared

You can make a big impact on transaction length by providing a complete package of required documentation at the start of the process.

Visit the lender’s website and look for a document checklist or resource page that lists the documentation they require for commercial transactions. Many lenders require similar documentation, but you could cause a significant delay by leaving important information out of your initial loan submission.

Silver Hill requires the following information at the start of a small-balance commercial transaction:

  1. Commercial Loan Application
  2. Current Credit Report

In addition, having the following documentation will expedite the underwriting of the loan request:

  1. Previous title policy
  2. Insurance agent contact information
  3. Property manager contact information
  4. Schedule of recent improvements
  5. A valid purchase and sales agreement

Our team can help you acquire this information, but you could save serious time in the closing timeline by having it available at loan submission.

3. Focus on Constant Communication

Commercial mortgage transactions are complex – but the process can become far more difficult if communication breaks down between the lender, broker, and borrower. As the liaison between your client and the lender, it’s your job to manage expectations and make sure everyone is on the same page at every step of the transaction.

During the transaction, be sure to communicate regularly with your client – especially if this is their first commercial transaction. If they’re expecting a process similar to their most recent home refinance, they could grow impatient and blame you for any perceived delay.

While strong communication may not be the only key to an expedited closing, a breakdown or failure in this regard can sink any hope for a quick and positive experience.

Bonus – Know Your Lender

The small-balance commercial mortgage marketplace is full of different types of lenders, from banks and life companies to agency options, marketplace lenders, and other non-bank alternatives. Each of these lender types has its advantages and disadvantages, but if speed is important to your client, some of the more traditional options should be removed from consideration.

Take your local community bank – they offer the lowest rates and most attractive terms for borrowers who fit their requirements, but their transaction process can take up to 60-90 days and includes additional steps that can often delay closings. On the other end of the spectrum are hard money lenders, who offer temporary solutions that include high rates and reduced closing times.

Other types of non-bank lenders occupy the space between banks and hard money options. These lenders utilize varying transaction processes, with some being more effective than others. Certain non-bank lenders don’t even start their underwriting process until the 20th day of the loan transaction – effectively eliminating any chance of an expedited closing.

If your client wants both a reasonable rate and a speedy transaction, a non-bank alternative like Silver Hill could provide the best solution. Reduced documentation programs and a common-sense underwriting model give our team the agility they need to close many types of loans in 20-30 days. And unlike hard money options, we provide fully amortizing, long-term loans.

For example, the team at Silver Hill recently helped a broker close a small-balance commercial mortgage in 10 days. While 10-day closings are by no means commonplace, it’s helpful to see how this took place in case you ever find yourself in a similar situation.

Our team’s involvement with the deal began when the borrower grew frustrated with a competitor’s drawn-out process and re-trading of the loan’s terms. Since they were anxious to refinance their original hard money loan, they withdrew the deal and took it to Silver Hill. Our team reviewed the existing appraisal and documentation and was able to accept and process the loan in a matter of days. When a lender receives this much information at the beginning of the process, they can avoid many of the delays that plague commercial transactions and close deals much faster.

You won’t always be able to provide an appraisal or title commitment beforehand, but you can take steps to ensure that the lender has everything they need to move forward. Visit their website and look for a document checklist or resource page that lists the documentation they require for commercial transactions. Many lenders require similar documentation, but you could cause a significant delay by leaving important information out of your initial loan submission.

For our 10-day closing, the borrower took advantage of our Lite Doc Program to secure funding without providing tax returns or a 4506T. This kind of reduced documentation program isn’t available with most traditional lenders – but it can save precious time during a transaction and make life easier for your client.

A non-bank alternative like Silver Hill may not always be able to close a transaction in such a short amount of time, but the possibility exists – and that just isn’t the case with many traditional lenders. Keep this in mind when shopping for a lender partner and you’ll be much more likely to land on a solution that best matches your client’s needs.

Every borrower has a specific set of needs. But a speedy and painless transaction seems to be at the top of nearly everyone’s list. If you partner with an experienced lender and work together throughout the process, you can close loans quickly and build your reputation as a commercial mortgage solution provider.

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