Mark Fogel is president and CEO of ACRES Capital, which
he founded in 2012. Fogel has more than 20 years of experience in commercial real estate finance, with a particular focus
on providing developers and entrepreneurs with innovative
debt and equity solutions. Fogel employs an asset-management
approach to identifying and underwriting loan opportunities.
Since inception, the ACRES portfolio has grown to more
than $600 million in managed assets. ACRES Capital is
an SEC-registered investment adviser. Reach Fogel at
An Alternative Lending Checklist
Knowing what to look for helps to ensure surprises won’t derail a deal
By Mark Fogel
Alternative lenders have been successful in filling needs in the marketplace by pro- viding flexibility, diversity among product offerings, and adapting to changing
regulatory and economic times. Additionally, these
specialized lenders, which are a competitive alternative
to traditional banks, have been able to serve the needs
of small businesses and borrowers by tailoring their
programs to reflect smaller loans, or by helping those who
are either underbanked or nonbankable.
These attributes, along with convenience and expedited loan processing, have enabled alternative lenders
to attain a 3.1 percent share of the nearly $3 trillion in
commercial mortgages outstanding in the U.S., according to the Mortgage Bankers Association. These facts,
however, beg the question: What should commercial
mortgage brokers keep in mind when dealing with alternative lenders and how does a borrower ultimately
select such a lender?
When considering an alternative lender, there are
a couple considerations for sourcing capital. First, it’s
important for a mortgage broker to know whether
the lender uses a balance-sheet or discretionary-funds
strategy, or a loan-securitization model. In-house
financing generally results in fast, expedited approvals.
A lender that securitizes, however, will approve a loan
with the goal of eventually selling it to another party.
An alternative lender may have experience with all types
of commercial property assets. Diversified asset types
may include multifamily, retail, industrial, student housing
and senior housing — such as assisted-living facilities.
An experienced lender will have tailored loan-product
offerings for each asset type.
The lender’s management team should have extensive tenure, because a strong real estate and asset-management background is crucial for withstanding
all cycles of the market. Additionally, consider the
lender’s track record.
Work with a lender that closes a deal in the promised
time frame without re-trading loan terms. This is critical
because some deals require the borrower to close
within a specified time frame with hard investment
dollars. Finally, look for an alternative lender that has
multiple repeat borrowers because this essentially
serves as a verification of the lender’s capabilities.
Alternative lenders may have financing programs with
a local, regional or national presence. Be aware of the
lender’s geographic limitations. If you are looking to
borrow in different states, for example, it’s especially
important to consider a lender with a national platform.
Again, these lenders may have extensive platforms
to deal with all asset types. If your client is looking
to develop different types of assets, consider using a
lender that provides one-stop shopping.
The lender’s programs should offer reliability. Certainty
of execution on any financing deal results from transparency, maximizing resources and professional integrity.
Loan offerings should include flexible terms. The lender
should be creative in structuring the deal financing. In
these instances, thinking outside of the box is key. This
includes having variable thresholds on loan-to-value
(LTV) and loan-to-cost (LTC) ratios.
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