Alternative Mortgage Does Not Have to be Hard Money

Have you been turned down by your bank for a real estate loan? Or are their underwriting requirements just too onerous?

Let’s face it. Trying to buy real estate to house your growing business, or investing in income producing property, can be challenging. Add into the mix a few bumps in the past, such as credit blemishes or back taxes owed, and it can be an uphill climb.

Commercial property owners, or would-be owners, can face many such challenges to their real estate ownership goals. When your local bank can’t come through, it is tempting to think the only options may be high interest hard money loans. Or merchant cash advances if you are looking to borrow against equity for working capital.

If local bank financing is not in the picture, a “small-balance” commercial loan from a commercial mortgage company could be your answer.

When do small-balance commercial mortgages make sense?

A small-balance commercial mortgage from an alternative lender may be just what the doctor ordered. The small balance market specializes mainly in loans from about $100k up to $2 million. With less stringent requirements than typical banks. Here are a few reasons you could have trouble with conventional underwriting:

• Your tax returns may not present a complete picture of your repayment ability.
•  You have a tax lien or are on an IRS payment plan (usually an automatic loan denial)
•  Past credit issues or bankruptcy
•  You need a faster loan closing than can normally be accomplished with a conventional lender.
•  Your goal, such as cashing out equity for working capital or investing outside the business, goes against bank policy.

Working with a small balance alternative lender means none of these are the end of the road for your real estate goals. Your Preferred Capital Funding commercial mortgage specialist excels in arranging loans for the above plus a whole lot more, with single digit rates and 30-year terms.

Small balance commercial mortgages in action

Here are a few recent examples that started out with a “no” but ended with a resounding “YES”:

• A borrower wanted to pay off a private mortgage and combine it with other business debt. They did not qualify for a bank loan because of income verification requirements. Perfect scenario for a small-balance alternative mortgage.

• A borrower wanted to refinance their investment property to pay off a higher rate mortgage. Because of stricter pandemic guidelines and the smaller loan amount, their local bank was unable to work with them. Small-balance lender took the time to listen to their story and find mutual value in approving the loan.

• A borrower wanted to pay off a loan and a line of credit, as well as obtain cash out for business expenses. They were unable to get a bank loan because they could not show their complete income through tax returns. By verifying cash flow using bank statements and a current rent roll, they were able to get the money they needed.

Getting turned down by a bank is no fun. But it’s not the end of the story. If any of this rings true with you, call a Preferred Capital Funding specialist today at 770-648-8100 and let’s work together on your goal.