If you need a loan to buy a property for your business, you go to a bank. But if you just need a small loan to fix something or replace a vital piece of equipment you will want to look for a commercial lender that handles smaller loans.
In theory, you would think a bank would be open to lending any amount, but some prefer to stick with larger amounts; enough to purchase the office building, restaurant space, warehouse, or workshop. They don’t want to waste time doing the work for loans that are just “small potatoes.”
Of course, just like there are benefits to working with a bank when you need $3 million to buy a self-storage facility, there are benefits to working with a commercial lender that specializes in smaller balances.
What can a small-balance commercial lender do for you? They will give you an opportunity where a large bank would not. How so? Well—rather than turn you away because of certain issues, they figure out a way to work with or around them so that you can be approved for a loan:
– Income Verification: one of the many things large banks will turn you down for is if they can’t verify your income. They want to make sure you can pay your monthly note, so they want to see what money you already having coming in and what will be coming in. They will want to see bank records and tax returns. Small-balance lenders will look more towards other financial documents.
– Past credit issues: If you have a bad credit history, you might as well not even bother walking into a bank, but small-balance lenders tend to be more forgiving of past credit issues. Just how forgiving will be reflected in the terms of your loan, but at least you can still be approved.
– Tax Liens: If you are behind on your taxes, don’t even bother to print off the paperwork for a bank loan. You will not get it. But many small-balance lenders will work with you to resolve those issues.
One thing that banks tend to forget—or at least not forgive—is that we are all human. As humans, we are going to make mistakes. Does that mean we can’t open a business? Does that mean we can’t be responsible for our bills? Absolutely not!
But at the same time, can you blame them for being cautious when it comes to approving loans? Would we want our own bank to be handing out money to whoever asks for it? No, or course not!
So, it is good that a commercial lender can come in forms other than a bank. While the terms may not be as nice as what a bank will offer, at least the borrower can get the money needed to help fulfill the dream.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.