We Listen. We Advise. We Fund.
We listened to the borrower’s challenges
regarding the property’s finances.
We advised the borrower, who has limited
experience in commercial real estate, and
offered a solution to clear past-due taxes.
We funded in time to beat the deadline
imposed by the prior lender.
Or contact us: firstname.lastname@example.org | cherrywood.com
SMALL-BALANCE COMMERCIAL REAL ESTATE LENDER
Cherrywood Commercial Mortgage Corporation is licensed in California as a finance lender and broker under the
California Finance Lender Law, License 603 K675. Cherrywood Commercial Mortgage Corporation: BRE 01930895
Loan Amount: $1,250,000
Location: North Olmstead, Ohio
Date Funded: July 2014
Broker Fee: $17,850
« SBA 504 continued from page 34 Sometimes, prequalification is a
very straightforward process. Other
times, the information provided by
downpayments usually ranging from
20 percent to 35 percent.
Throughout the loan process, the
necessary to be approved for financ-
ing, gives the client an edge over com-
peting buyers and generally assures
a speedier approval process once the
client finds the ideal building.
To prequalify, clients need to provide their personal and business tax
returns, personal financial statements,
and an updated profit and loss balance sheet. These prospective buyers
also should decide how much money
they can spend on a downpayment,
which will help determine the maximum loan amount. As noted, SBA 504
loan programs are especially attrac-
Prepare in advance
tive because the downpayment may
be as low as 10 percent, in contrast to
conventional commercial loans, with
Unfortunately, there are also cases
where the seller puts a property up
for sale, then after receiving multiple
offers, takes it off the market. In ex-
treme cases, a seller may even ask for
more money after the borrower made
an offer at the initially agreed-upon
The best preparation strategy for
mortgage originators is to get their
business-owner clients prequalified
right away when the latter make the
decision to buy rather than lease.
Prequalification ensures that the cli-
ent has provided all of the information
broker, borrower, lender and the CDC
should be in constant communica-
tion to expedite the approval process.
the borrower raises questions that
need to be addressed prior to loan
Perhaps the deal is tighter than expected, for instance, or cash flow is
worryingly lean. In cases like these,
the CDC works with the broker and
borrower to anticipate and address
any issues that will be raised during
the under writing process. Complicated
situations such as these require extra
time, and extra days could cause the
buyer to lose out on a property, which
is why prompt prequalification helps
to prevent a good deal of frustration
later in the process.
A broker and client may maximize the
latter’s leverage to negotiate for the
ideal property during prequalification in an SBA 504 lending scenario.
Based on the client’s current business
rent expense, determine what amount
could be borrowed that would result in
a monthly mortgage rate equaling the
client’s current rent. This will help indicate if the borrower will be able to afford to the maximum prequalification
amount available from the lender.
This knowledge is useful when applied to property-purchase negotiations. Borrowers will often go through
multiple rounds of offers, and by
knowing their predetermined loan-amount limit, they feel more comfortable and have more confidence
because they know exactly how high
they can afford to go on the deal.
This is also a benefit when an offer
is accepted because a prequalification letter to support the offer can be
turned around almost immediately.
When prequalification is done correctly, the CDC and lender are comfortable with the finances of a deal
at the outset and can support the
borrower in a competitive situation,
because the upfront preparation has
already been done.
The commercial real estate market
remains a competitive one, especially
for small-business owners without
endless capital resources. But armed
with the flexibility and low downpayments of SBA 504 loans, mortgage
originators and their small-business
clients will find that advanced preparation, particularly in the form of
loan prequalification, makes it easier
to compete with the big guys in the
property-purchase game. •
“Borrowers will often
go through multiple rounds of offers, and by
knowing their predetermined loan-amount
limit, they feel more comfortable.”