Small Commercial Loans – The "Middle Child Syndrome"

Remember Jane Brady. Ignored and always overshadowed by her older and prettier sister Marcia? Borrowers seeking small commercial loans will face the same challenges as Jane. Small commercial loan requests will have all of the typical commercial loan challenges, and yet have one more major hurdle – being ignored and neglected. Commercial bank loan officers and commercial mortgage brokers will in most cases simply ignore the borrower’s small commercial loan. Bottom line, there is the same amount of work involved, without the decent payday.

This often comes to a shock to many borrowers that are use to residential loan officers competing hot and heavy on their $150,000 home mortgage. The differences here are many but it’s not uncommon for a residential broker to make 3 or 4 points on a loan, while the commercial mortgage brokers is often expect to make only 1 point. These borrowers often become frustrated when they can’t get their messages returned on a $400,000 loan.

Besides the money, most commercial brokers and bank officers have a bit of an ego and will not want to admit to their peers, or bosses that they have spent 2 months working on a $300,000 small commercial loan. Most will not acknowledge and or mention a loan closing that is less than $1,000,000. $1,000,000 and above is considered respectable.

So borrowers seeking small commercial real estate loan options will in most cases be treated as the "Jane" deal and will have to overcome this factor. It’s best to try to work with companies that are actively marketing and want to work on these smaller commercial loans than to try to egg a broker on that is not interested. The rub here is finding the commercial mortgage broker that has the experience needed to complete the transaction and yet will still be interested in working on the small commercial loan.small commercial loans