Getting Started with Small-Balance Commercial: Part 2

Getting Started With Small Balance Commercial Part 2

Go to the Source

Tips for finding your first commercial loan opportunities

Ready, set, go! Your plan is in place, you’ve positioned yourself to diversify by offering small-balance commercial loans, and now it is time to source those first few transactions. We suggest starting with who and what you know – making potential loan opportunities easier to find, and getting you off to a good start.

Mine your own business

Said another way, leverage your database (or Rolodex, or contacts, closed files, you get the point). Often, borrowers in your own book of business are the same people you would target for small-commercial loans. The same people who have trusted you for their residential mortgage needs can now bring you their commercial loan requests. Good for them, and good for you.

We’ve seen success with the following tactics for sourcing business within your own customer base:

  • Review the Real Estate Owned (REO) section of the standard 1003 residential loan application. This is an easy way to identify clients who own commercial property. Use this as a conversation-starter to learn more about their investments and how you might be able to assist with their financing needs in the small-balance commercial space.
  • Check the occupation line of loan files, or professional profiles of your customers. What you’re looking for here: physicians, dentists, lawyers and other professionals who may be interested in purchasing space for their practice. In addition, self-employed individuals or business owners in other sectors may benefit from purchasing commercial real estate for their business, or some may own their location and need to refinance.
  • Missed opportunities. Have you previously turned away commercial loan opportunities because you did not offer the product? Think about any potential leads in the past that you referred to someone else. Perhaps that customer has other needs, or is at a point where they would want to refinance a loan coming due or for cash-out purposes.

A network of opportunity

Outside of your customer base, look to referral sources in your current network, and consider branching out to forge new relationships now that you are offering commercial financing.

  • Existing relationships with strategic partners such as real estate agents, property appraisers, accountants and financial advisors can provide a good source for commercial loan leads and referrals. Previous studies have indicated that small-commercial loan borrowers find their mortgage professional through prior experience or referrals from friends, family, business associates or Realtors. Your strategic partners may also have other suggestions for revealing commercial financing opportunities within your customer base or network.
  • Banks and credit unions are sometimes unable to serve the commercial loan requests they receive from their customers. Talk to your contacts at local institutions to see if you can be a resource for placing small-commercial loans they cannot fund, and help them keep their depository clients happy.
  • Cultivate new professional relationships with developers, banks, apartment owners, small-business organizations, and other commercial-related referral sources. You both have something to offer the market, and the people you interact with can find value in making a new connection.

Commercial loan opportunities exist with people you know, and people you have yet to meet. One of the most exciting aspects of your new offering is that when you can assist commercial borrowers in securing the financing they seek, you are helping people invest in the community.

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