Owner-Occupied Opportunity with Commercial Mortgages


The next big thing for your mortgage origination business could be smaller than you think.  Owner-occupied commercial mortgages present a serious opportunity within the world of small-balance commercial lending – if you’re looking to grow your business and increase revenue, consider broadening your focus beyond the most common multifamily investor deals and becoming a solution provider for the countless small-business owners in your market.

What’s the opportunity?

According to the Small Business Association (SBA), there are currently more than 28 million small businesses in the U.S. today, and around half are operated outside of the home.  This means that there are likely a large number of small business owners in your area who are looking to either purchase or refinance a commercial property.

The problem is that the owners of U.S. small businesses have historically struggled to secure financing from traditional banks.

American Banker reports that about 80% of small business owners who apply for a non-SBA bank loan are rejected.  When it comes to commercial mortgage financing, borrowers typically get denied for the following reasons:

  • The property is outside of the bank’s footprint.
  • The financing request exceeds the bank’s legal lending limit
  • The deal involves an unacceptable collateral type
  • The borrower has a significant cash-out request
  • The deal includes LTV or DSCR issues

Many small business owners are not aware of the non-bank sources of funding available to them.  Or they are so busy running their business that they don’t have time to hunt for the best solution for their unique needs.

This is where you come in!  You can use your expertise and networking ability to secure alternative funding solutions for small business owners, which in turn can lead to more closed deals and more revenue for your business.

What are the financing options?

To fully appreciate the opportunity you have with owner-occupied transactions, you’ll need to gain a basic understanding of the main financing options available to small business owners.

  1. Non-Bank Lenders

Non-bank lenders are financial institutions that extend credit or loans to consumers and businesses who do not qualify for financing from traditional lenders like banks.  These lenders include marketplace lenders, and hard money lenders. They offer permanent, bridge, and working capital loans. Loan amounts range from a low of a few hundred dollars to $100 million depending on the lender and their source of capital.


  • Streamlined underwriting process typically resulting in faster closing timelines
  • Ability to finance credit-challenged borrowers or transitional properties
  • No depository relationship required


  • Rates and fees tend to be more expensive


  1. Conventional Bank Financing

Banks offer attractive rates, but their credit requirements and underwriting policies make it difficult for many borrowers to secure funding.  Closings may await long reviews.  Property types may be limited.


  • Lower interest rates
  • Multiple financing options
  • Convenience and accessibility to the lender


  • Cumbersome application process
  • Lengthy approval process
  • On-going reporting requirements
  • Tighter UW requirements
  • Credit committees


  1. SBA Loans

The U.S. Small Business Administration (SBA) is a federal agency committed to furthering the growth and development of small businesses. One of the ways it does this is by guaranteeing loans to small businesses made through lending partners nationwide.

SBA loans include lower down payments and longer repayment terms than conventional bank loans, enabling small businesses to keep their cash flow for operational expenses and spend less on debt repayment.


  • Up to 90% financing
  • Terms up to 25 years
  • Fixed and variable rate options
  • Most for-profit small businesses are eligible
  • Owner-occupied businesses or properties


  • Lengthy processing and approval timelines
  • Additional collateral may be required including inventory, receivable, equipment and equity in your personal residence
  • Higher closing costs

Take some time to familiarize yourself with each option so you can quickly identify the right solution for each owner-occupied opportunity you encounter.

How can Silver Hill Funding help you close more deals?

Since so many small business owners fail to qualify for traditional lending programs, partnering with a non-bank alternative like Silver Hill Funding, LLC is an important step to capturing additional business opportunities.

Silver Hill’s flexible solutions are designed to meet the needs of a wide range of business owners – even those who can’t provide the full documentation banks require.  Here’s a quick overview of our options for owner-occupied transactions:

  1. Complete Program – best for credit-worthy business owners looking for an alternative to restrictive bank financing
  2. Bank Statement Program – best for business owners who prefer to prove their income by providing 12 consecutive months of business bank statements instead of tax returns
  3. Stated Owner-Occupied Program – best for owner-occupied transactions where the business owner has difficulty documenting their income and requires a stated alternative

Our Stated Owner-Occupied Program is a particularly useful solution for small business owners because it allows them to secure funding without having to provide tax returns or a 4506T.  This type of stated income solution is typically only available in the world of hard money – now you can offer the same benefits with more favorable terms and lower interest rates.  You can learn more about the innovative program here.

Want to discuss an owner-occupied deal?  Contact your regional manager today

Take advantage of the Silver Hill’s non-bank solutions and close more of the owner-occupied deals in your area.  If you have a deal in mind right now, feel free to reach out to one of Silver Hill’s regional managers to discuss the particulars.  You can also quickly price the scenario yourself by using our free mortgage payment calculator.