Selling non-conforming, small-balance commercial mortgages to your non-bankable borrowers can be a challenge, especially if they expected bank terms and rates. When selling this type of loan to your clients, it’s important to remember that you need to present the mortgage as a means to an end. First, you need to find out what your borrower wants to accomplish. Here are some common goals:
Buy equipment or inventory:
Many small business owners require commercial mortgages to purchase new equipment for their business or to supplement their existing inventory. If this is the case, keep your borrower focused on how the loan will help to accomplish this goal and benefit their business.
Upgrade or purchase a building:
Improving a building or purchasing a new property to expand a growing business is another common goal for commercial borrowers. Be honest with them regarding rates and terms, but make sure they understand that a non-conforming commercial loan may be the best option for them.
Inject capital into the business:
Sometimes, small business owners need working capital in order to take advantage of great inventory deals or to cover their bills while they wait for receivables. If you’re working with a non-bankable borrower in this position, it’s important to explain to them how the small-balance commercial loan will benefit them.
Pay off debt:
Many small business owners have accrued a fair amount of debt, which sometimes prevents them from obtaining a bank loan. While a non-conforming loan’s rate might be higher, it’s crucial to them know that a non-conforming loan offers them the chance to pay down their debt and improve their business credit.
Focusing the conversation on what your borrower plans to accomplish is crucial to selling non-conforming, small-balance commercial loans. Explain to your borrowers that these mortgages are the means to and end: improving their businesses. Once your non-bankable borrowers understand that small-balance commercial mortgages are the best way to accomplish their goals, you can focus on closing these deals.