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Getting your Borrower a Commercial Mortgage for a Light Industrial Property

Commercial Mortgage
Posted on 
February 11, 2016

Light industrial properties are often a difficult property to finance, particularly if the building is relatively small or if the borrower is looking for a small-balance mortgage. As a commercial mortgage broker, you need to be prepared to help your borrowers who are seeking financing for these properties. Once you find a nontraditional lender who will fund light industrial properties, here’s what you’ll need to be able to discuss:

The property itself:

When you speak to your borrower, find out as much about their light industrial property as you can. Make sure you know the size and location of the property, as well as the business your borrower operates from the building. Additionally, ask your borrower the estimated value of the property and be sure they have documents that can back the value claim. Having this information up front will make securing your borrower a small-balance commercial mortgage simpler.

Your borrower’s credit history:

Some of the borrowers you work with will be non-bankable because of their credit history. You need to provide your small-balance commercial lender with a recent credit report with trade lines and scores. You should also discuss any past financial issues with your borrower and prepare a credit explanation for your lender when necessary.

The environmental situation:

The biggest funding obstacle for light industrial properties is usually environmental issues. Be sure to ask your borrower about any past environmental problems that property has had. You should also avoid light industrial properties with operations that produce hazardous wastes, as most lenders won’t be interested in financing them. Be prepared with documents about how wastes are managed in the business.

Your borrower’s plans and ability to pay:

Before a commercial mortgage lender will finance any commercial property, they need to know your borrower’s plans for the money, as well as how they plan to repay the mortgage. Make sure you discuss this with your borrower and outline these plans for your lender in the loan submission summary. Provide all relevant financial documents that will prove your borrower can make their monthly payments.

Helping your borrower to obtain financing for their light industrial property can be tricky, but with the right information and the right lender, you can get them the funds they need. Submitting the above information and being ready to discuss it will go a long way toward getting your borrower a small-balance commercial mortgage and will allow you to close more loans.


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