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Securing Commercial Mortgages to Pay Off Merchant Cash Advances

Commercial Mortgage
Posted on 
October 2, 2018

For some small business owners, a merchant cash advance might be a good solution for short-term financing needs, provided they pay it off quickly. However, these cash advances can quickly become a problem as borrowers are subjected to the increasing rates these lenders charge. This can lead to cycle of payday loans resulting in a fairly rapid accumulation of debt if a borrower isn’t careful. If you’re a commercial mortgage broker, a borrower like this may come to you seeking more stable financing, and knowing how to assist them will help you close more deals.

Here’s what you need to do to secure commercial mortgages to pay off merchant cash advances:

Reassure your borrower that they have options.

To many small business owners, the cycle of debt that results from multiple cash advances might seem like a problem with no solution. Often, these borrowers have gone the merchant cash advance route because they’re not bankable and they don’t realize that there are alternative lenders who can provide them with long-term financing solutions that their bank cannot. As a broker, you need to let these borrowers know that they have other options and advertise your relationships with non-conforming commercial mortgage lenders.

Understand your borrower’s financial situation.

Before you can connect your borrower with the right alternative lender, you need to take the time to understand where they’re at financially. What led them to seek out a merchant cash advance? How much debt have they accumulated? What is their credit history like? How is their business doing? The answers to these questions will help you to choose the right commercial mortgage lender for your borrower.

Submit the deal.

Once you’ve gotten a grasp of your borrower’s situation, it’s time to gather all of the relevant information your lender will need and send them the deal. Make sure to include a completed 1003, a recent credit report with scores and tradelines and a detailed summary of the deal. Be prepared to discuss your borrower and their financial situation in detail.

While merchant cash advances are a workable financial solution for some borrowers, they spell big trouble for others. For brokers, these borrowers represent an opportunity to help businesses secure more stable financial footing and to close more commercial mortgages.


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