-
Direct Business and Commercial Lenders
I am a residential mortgage loan originator and want to diversify my mortgage origination business to business and Commercial loans. Can you please give me a comprehensive detailed step by step overview on how to about it? How does you learn the business and Commercial Lending process as a Commercial business and Commercial loan broker? What type of business and Commercial loan programs are there? How do you become affected with a wholesale direct Commercial lender? What are the eligibility and requirements to be a business and Commercial lender? How do you get leads on business and Commercial loans? Can you please share three case scenarios on how business and Commercial Loan Officers generate leads? With who and how do you Network with potential referral partners? How can do subtly merge your residential lending business model with a business and Business and Lending Platform? Do business and Commercial Loan Officers need to get licensed and if so what are the licensing and bonding requirements? Thank you in advance.
-
4 Replies
-
Shifting from Residential to Commercial Mortgage Origination
Shifting your focus to commercial mortgage origination offers a strategic opportunity to broaden your scope of business and increase your revenue.
Below is a detailed outline for making this shift.
Acquiring the Commercial Lending Process
Education and Training
- Take courses on real estate financing from the MBA.
- Enroll in programs offered by the CMSA.
- Obtain the Certified Commercial Investment Member (CCIM) designation.
- Become a member of NACLB for information and networking opportunities.
Recognizing Major Changes
- A borrower’s capacity to repay is less important than what is generated from the property.
- Debt service coverage ratio (DSCR) and LTV (Loan to Value) are also critical, along with NOI-Net Operating Income.
- Specific documentation is required, like rent rolls and operating statements.
- 60-90 days period for closing as compared to 30-45 days for residential
Mentoring
- Observe operations of skilled commercial lenders.
- Work with junior commercial brokers or experienced commercial brokers for assistance on initial deals.
- Commercial real estate investment groups.
Types of Commercial Loans
- Conventional Commercial Loans
- Credit Unions, Banks
- Usually, Terms are 5-10 years with 15-25 year amortization.
- Compared to residential, lower LTVs (65%-75%)
- The primary consideration is the borrower’s creditworthiness and the property’s performance.
SBA Loans
- The general purpose of SBA 7A loans up to 5 million
- SBA 504 loans for commercial real estate and equipment financing (Max limit is $5.5 million)
- Lesser believed payments and longer terms of payment (maximum 25 years duration)
- Needs further proof and endorsement of SBA
CMBS (Commercial Mortgage-Backed Securities)
- The greater amount of funding (commonly starting with $2M)
- Availability of non-recourse clauses
- Fixed interest for 5-10 years
- More severe penalties for paying beforehand
Bridge Loans
- Financing is limited (start is 6 months, and max is 36 months).
- Closer to the mark interest rates but quicker to close.
- Utilized for acquiring, refinancing, or repositioning a property.
- Advanced relaxed standards for nursing.
Hard Money/Private Money
- The main reliance is on evaluating the property to give loans.
- Loans close quickly but incur higher interest charges and more fees.
- Normally issued for fix-and-flip properties or other transitional buildings.
- Not much documentation is needed.
- Becoming Affiliated with Wholesale Commercial Products.
- Affiliated with the bulk purchase of commercial products.
Research and Identification
- Build a list of readily participating commercial wholesale lenders available in your region.
- Go through their programs and study the guidelines and requirements for being a broker.
- Take part in mortgage and trade fairs.
Application Process
- Bundle and submit supporting documents along with broker applications.
- Present your business plan alongside your given industry experience.
- Prepare to undergo merciless assessment reviews of your business.
Sign NDA and Broker agreements.
Building Relationship
- Set intro meetings and presentations with an account manager.
- Encourage specific submission platform training.
- Learn to justify claims made on their documents.
- Remain connected and not disengaged.
Eligibility and Requirements for Commercial Brokers
- What so ever is outside of commercial is just business.
- Form the business type your commercial deals with using LLC or Corporation choices.
- Obtain all relevant business permits.
- Get Errors and Omissions Liability Insurance.
- Acquire, Lease Out, and/or Register Office Spaces
Financial Needs
- Have sufficient funds to cover running costs, leasing, and other expenses.
- Form alliances with various financial institutions.
- Open Accounts in Trust (Escrow) whenever necessary.
Professional Background
- Possess relevant skills and experience to support funding requests (Subordinated debt).
- Prepare and present reports of successful funding.
- Gather professional recommendations from former clients.
Generating New Clients For Investment Loans
Active Promotion
- Legal practitioners with an emphasis on real estate.
- Specialized accountants and tax inspectors.
- Real estate brokers and property sales agents.
- Real estate management experts.
- Intermediaries and business consultants.
- Commercial banking relations personnel.
- Economic improvement agencies.
Business Expansion and Advertising.
- Create a digital presence that promotes and focuses on doing business using commercial funds.
- Develop articles that inform business owners.
- Conduct seminars on investing in business property.
- Conduct responsive online marketing specifically on business funds.
- Create automated email workflows for prospective clients.
Policy Participation
- Become a member of organizations dealing with commercial property investment.
- Take part in selected business chamber activities.
- Go to targeted trade shows, marketing events, and conferences.
- Publish in commercial magazines and periodicals.
Lead Generation Scenarios
Scenario One: Developing Realtor Referral Partners
- John concentrated purely on developing relationships with mass commercial real estate brokers.
- Attends all locally organized commercial real estate social and professional gatherings.
- He created his own “Merchant Lunch and Learn” cadre, where he taught agents the basics of commercial financing and other ancillary services, such as business expansion.
- Assisted agents with preliminary offer analyses before they were put on the market.
- Created an automated system for qualifying properties step-by-step.
Accomplishment: Earned 70% of business from agent referrals with them, averaging a loan size of $2.2M.
Case 2: The Business Banking Alliance Builder.
Sarah fostered connections with business bankers at the local banks who:
- Were unable to process specific loans because of regulatory restrictions.
- Had clients needing amounts beyond their budget.
- Needed shorter turnaround times than the bank offered.
- She developed an organized referral program with distinct lines of communication and offered consistent feedback.
- She positioned herself as a trustworthy information source and provided regular market updates.
Result: In the first year of transactions alone, 18 were generated, which multiplied to an average of $1.4 million each.
Case 3: The Industry Specialist
- Michael made it a point to work solely on medical office financing.
- Joined healthcare industry associations.
- Sponsored medical conference events.
- Created specialized content addressing the novel necessities of medical practices.
- Medical equipment suppliers who knew when the practices were expanding supplied him with relevant contacts.
- For this property type, he built a reputation as the undisputed authority and…
Result: Paid marketing yielded results. He closed 12 transactions in his niche with an average of $3.8 million. Due to his specialized knowledge, he could charge premium fees and close at higher margins.
Networking with Referral Partners
Strategic Partner Selection
- Know the partners most relevant to your target clients and work with them often.
- Aim for quality partnerships instead of focusing on many.
- Research your meeting partners and learn about their business before the meeting.
Value Proposition Development
- Define clearly what their value is.
- Communicate your work as a commercial lender.
- Clarify how you protect their client relationships.
- Show how easily you do their job.
Customer Relationship Building Activities
- Educational sessions for teaching distinctions of commercial lending.
- One-on-one meetings focused on appreciating clients.
- Joint marketing with appreciative client-side events.
- Regular information, status, and check-in updates.
- Appreciation sign check mark before and after events.
- Client supporting events
Systematic Follow-Up
- Set up a CRM to monitor referral sources.
- Communicate schedules and share important updates about the industry.
- Reward promptly and acknowledge referrals on time.
Residential and Commercial Platforms Merging
Integrating Business Structures
- Design unique marketing and branding elements while maintaining relationship cohesion.
- Create and develop branding and marketing materials that tell the same story.
- Consider developing different websites for the entities that interlink.
- Establish relevant workflows for the various types of loans.
Team Development
- Employ and/or train staff to manage commercial documentation.
- Clearly articulate the job descriptions for all positions.
- Collate information to develop shared resources where necessary.
- Develop training programs that familiarize staff with other departments.
Client Education
- Send alerts to inform current residential loan clients about capabilities involving commercial loans.
- Prepare and provide instructional content for the commercial loan process.
- Conduct webinars or seminars for prospective clients dealing with investment properties.
- Develop and provide successful transaction case studies.
Cross Selling Strategies
- Examine residential client databases to locate business owners.
- Search for clients invested in residential premises with high rental yields.
- Conduct analyses of properties that clients are qualified to rent out as investments.
- Develop existing client referral programs.
Licenses and Regulatory Requirements
- Licensing for Commercial Mortgage Brokers can be controlled within the state limit.
- Based on the location, there are different standards that may not need a specific license in some situations.
- This is different from residential mortgage origination, which requires a mortgage loan originator license in all regions due to the NMLS framework.
State-by-State Variations
- Some states have no limit to having a distinct license as a commercial broker.
- Several states also require commercial mortgage vendors to have an official license.
- Some states govern these under laws that deal with real estate brokers or business brokers.
Common Materials
- Fees and information for state licensing applications.
- Conduct background investigations.
- Inquiry into set educational standards which differ significantly among regions.
- Documents that outline experience in the field.
- Verification of the financial standing to undergo a surety bond that fluctuates between $10,000 and $50,000.
Federal Guidelines
- Other registrations could be needed when working with SBA loans.
- The compliance programs for anti-money laundering and fraud.
- FTC and CFPB guidelines regarding advertising and business practices.
Professional Suggestions
- Speak with a legal specialist licensed to practice in your jurisdiction.
- Get in touch with your state’s financial regulatory body.
- Look into membership with some associations that focus on compliance updates.
- I suggest contacting your state’s Department of Financial Institutions or banking division for some of the requirements in your area.
- They differ considerably, and the criteria shift periodically.
Is there any part of the transition strategy you would like me to expand on?
-
Yes, please. I would appreciate you to elaborate on all aspects of this commercial lending transition strategy.
-
Comprehensive Strategy for Commercial Lending Transition
- Enhanced Learning of Commercial Lending Procedures
- Comprehensive Approach to Education and Training
- Formal Instructional Programs
Coursework in Multifamily and Commercial Mortgage Banking (MBA)
- It encompasses property valuation, loan structures, and underwriting basics.
- Usually needs 40-60 hours of coursework.
- On average, complete series costs $1,500-3,000
- Awarded a professional designation after completing the series
Designations Of The CCIM Institute
Four core courses:
- Investment Analysis
- User Decision Analysis
- Market Analysis
- Financial Analysis
Requires completing a portfolio demonstrating experience. 1-2 years to achieve is common. Very renowned in circles of commercial real estate
The MBA (Mortgage Bankers Association) Education
- Basics of Commercial Real Estate Mortgage Origination.
- Analysis and Underwriting Of Commercial Loans.
Case Study: Finance On Commercial Real Estate
- Knowledge Of Specialized Requirements
- Qualitative Knowledge Required
- Financial Analysis
Mastering the crafting and analysis of Pro Forma
Interpretation and calculations of the following key metrics:
- NOI (Net Operating Income) calculation methods
- Debt Service Coverage Ratio (minimum typically 1.25xDSCR)
- Loan-to-value ratio (LTV)
- Cap rate analysis and determination
- Debt yield ratio (annul NOI/loan amount)
Expertise Related To Types Of Properties
- Office: Tenant quality, lease terms, market vacancy rates
- Retail: Traffic numbers, co-tenants, anchor tenants
- Industrial: Ceiling heights, loading capacity, location logistics
- Multifamily: Rental rates, unit mix, expense ratios
- Specialty (hotels, self-storage…): Management requirements, operating models
Skills Needed for Market Analysis
- Competitive property analysis.
- Rent growth projections.
- Supply/demand dynamics.
- Absorption rates and trends.
Self-Direction Learning Resources
Books
- John McMahan: The Handbook of Commercial Real Estate Investing
- Michael Reinhard: Commercial Mortgages 101
- Peter Conti: Commercial Real Estate Financing
- Commercial Property Executive, Globe St, and Commercial Observer are examples of relevant industry publications.
- Podcasts: Commercial Real Estate Elite and Commercial Real Estate Show
- Online Resources: LinkedIn Learning and Udemy udemy offer courses focused on commercial real estate.
Mentorship Outline
- Weekly meetings
- Deal review sessions
- Shadowing client meetings
- Formal mentorship arrangement with established commercial lenders allows for shared compensation on client deals at a 70/30 split.
- Co-brokering fosters an agreement on clear roles and responsibilities, written partnerships, and defined timelines for independence.
Commercial Loan Programs
- Bank and Credit Union Programs
- Conventional Commercial Loans
Typical Terms
- Rate: Prime + 1 – 2.5% or 5-year Treasury + 2 – 3%
- Amortization: 15-25 years
- Term: 3, 5, 7, or 10 years with balloon payment
- Prepayment penalties: Step-down structure (03-02-01)
- Closing costs: 1-3 percent of the loan amount
Documentation Requirements:
- Lease abstracts for major tenants
- Rent rolls
- Financial statements from the borrower over the last 3 years
- 2-3 years of property operating statements
- Private guarantor’s financial statements
- Company documents (bylaws, operating agreements)
- Assessment of property condition
- Phase I environmental site assessment
Key Underwriting Criteria
- Minimum DSCR: 1.25x – 1.35x
- Maximum LTV: 65-75% (depending on property type)
- Minimum Debt Yield: 9-12%
- Global cash flow analysis of borrower
- Liquidity requirement: 9-12 months of debt service
- Experience requirement: History with similar assets
- Programs Offered by Life Insurance Companies
- Uses other bank lenders to differentiate
- Longer terms available (30 years maximum)
- Rate lock for the full period available
- Lower leverage: typical 60-70% LTV
Focus on
- better quality properties
- Less concerned with borrowers & more focused on property
- Not as constrained by real estate market changes
Typical Target Properties
- Class A office buildings
- Strip centers with anchors
- Industrial buildings with grade-A tenants
- High-quality multifamily dwellings
- Expanded Details Regarding SBA Loan Programs
- SBA 7(a)
- Purpose of Loan
- Acquiring another business
- Purchasing commercial real estate
- Buying equipment
- Providing operational funds
- Refinancing existing debt
Primary Highlights
- Guarantee fees of 2.25 to 3.75% of the amount guaranteed
- There is no penalty for prepayment, only on loans exceeding 15 years.
- Maximum loan $5 million
- LTV up to 90%, owner-occupied only
- 25-year amortization for real estate
- For-profit businesses under SBA size standard meet Eligibility
- 75% LTV for non-owner-occupied, up to 85% for previously occupied
Required Documents
- SBA 1919 (borrower’s details)
- SBA 413 (personal finance details)
- Project associated business tax returns in the preceding three years
For all individuals with a greater than 20% ownership stake, please provide:
- Personal tax returns for the last 3 years.
Please provide the following files:
- Debt Schedule
- Purchase Agreements
SBA 504 Program
Maximum Loan Amounts
- Standard businesses: Up to $5.5 million CDC portion
- Manufacturing or energy-efficient projects: Up to $5.5 million
Rate Structure
- Fixed-rate CDC portion: Treasury bonds-based
- First mortgage: Market rate determined by lender
Job Creation Requirements
- A job for each 75k of CDC financing, or
- Satisfy public policy or community development goals
- CMBS Loans – Detailed Analysis
Structure and Mechanics
- Loans specifically designed for securitization purposes
- Securitized together with a pool of other loans and sold to investors as bonds
- Serviced by specialized CMBS servicers (typically nonrecourse with carve-out guarantees)
- More aggressive leverage options (up to 75-80%LTV)
Unique Features
- Single Purpose Entity (SPE) Requirments
- The borrower must be a separate legal entity
- Other significant assets or operations are not permitted
- Independent director requirements
Prepayment Structures
- Defeasance (substitution of collateral with government securities)
- Yield maintenance
- Prepayment penalties
- Lockout periods (typically 2-3 years)
Reserves and Escrows
- Replacement reserves
- Tax and insurance escrows
- Tenant improvement/leasing commission reserves
- Cash management provisions
Ideal Property Types
- Properties with low rollover risk and stabilized characteristics.
- Credit tenants and national tenants.
- Office, retail, industrial, multifamily, hospitality, and other sectors.
- Properties in secondary and tertiary markets (sought after for higher yields).
- The minimal loan amount is often $2 million or greater.
Bridge Loans ─ Comprehensive Overview
- Use Cases
- Value acquisitions.
- Repositioning projects.
- Lease-up scenarios.
- Rapid closings for high-urgency deals.
- Recapitalization of held properties.
- Exiting construction loans precociously to stabilization.
Terms and Structures
- Extension options: secondary term of 6-36 months.
- Market-dependent rates of 6-10%.
- Common exit fees of 1-2 points origination.
- Reserve interest in project costs, usually capped at 80-85%.
- Subsequent funding portions: Reserved for project modification pre-stabilization.
- Partial for full recourse or nonrecourse options.
Preliminary lenders include:
- Debt funds
- Private equity firms
- Specialized bridge lenders
Mortgage REITs
- Some specialized program banks.
Hard Money/Private Money ─ Detailed Breakdown
- Lending Parameters
- AVR capped LTV ratio shot 65-75% margin after repair.
- Market-dependent rates of 8-14%
- 2-5 point fees
- 6-24 month terms.
- The prerequisite exit plan speeds up overall approval.
Required Documents
- Property description with photographs.
- Purchase contracts.
- Rehabilitation budgets along with timeframes.
- Exit strategy documents.
- Experience profiles of the borrower.
- Credited file alongside user’s background.
Ideal Scenarios
- Acquisition of distressed assets.
- Time-sensitive deals.
- Properties not in-stabilized.
- Need non-stabilized assets.
Becoming Affiliated with Wholesale Commercial Lenders – Detailed Process
- Identification and Research Phase
- Comprehensive Lender Research
Construct a database of potential lending partners based on the following criteria:
- Loan size parameters
- Specialization in certain types of properties
- Geographic focus
- Fee and rate levels
- Flexibility in underwriting
- Timeframes for processing
- Servicing approach post-closing
- Line servicing
Approach Servicing Post-Closing
- Post Closing Servicing
- Resources for Lender Identification
- Commercial mortgage alert (commercial trade publication)
MBA Commercial Lender Database
- Trade associations conferences like MBA CREF, CREFC
- LinkedIn groups for commercial lending
- Local associations of commercial real estate
Initial Evaluation Criteria
- Service history within the specific target geographical region
- Reputation from broker (peer interview)
- Target offerings from competitors
- Submissions of streamlined technology systems
- Commission strategy as to when payments are made
- Availability of support staff
- Training programs offered
Application and Onboarding Process
- Documentation Package Development
- Industry profile and company history
- Organizational chart with short bios of the covering key personnel
- Licenses and certificates relevant to the subject
- E&O insurance documents
- Summaries of sample transactions
- Describing referring clients and other business partners
- Providing a business and marketing plan
Due Diligence Preparation
- Checking the background of the principals involved
- Checking credit (personal and business)
- Reviewing legal compliance
- Verifying the financial stability
- Providing other wholesale references
- Analyzing historical transactions
Negotiation of The Agreement
- Commission structure with volume bonuses and other incentives
- Advertising training (marketing) commitments
- Exclusivity shun if able)
- Restrictions of the territory, if any
- Expectations in performance
Relationship Development and Maintenance
Building Relationships for Account Executives
- Don’t forget to check in at least every month.
- Please invite them for team presentations at your office.
- Ask for deal reviews for transactions that were declined.
- Promote market opportunities and share relevant intelligence.
- Celebrate closed deals together.
Performance Monitoring and Enhancement
- Monitor the deals and the ratio per lender from submission to closing.
- Compare time expectations to performance and monitor timelines.
- Analyze how price competition measures up.
- Document challenges and the methods for resolving them.
- Keep a scorecard per lender account and their respective relationship.
Advanced Strategies for Developing Relationships
- Join lender advisory committees.
- Join boards as a beta tester for new initiatives.
- Help with feedback market.
Guidelines for Brokers Analysis
- Set Recommendations to improve process and program development.
Eligibility Instruction Manual and Requirements of Commercial Brokers
- Strategy for Improving Business Structure
- Choices in Entity Selection Narrative
- Limited liability, flexible LLC taxation.
- Potential tax benefiting S-Corp for operator owners.
- Larger operations C-corp with multiple shareholders are appropriate.
- Meeting with CPA and business attorney required.
Business Setup Procedure
- Filing of incorporation or organization articles.
- Applying for an EIN.
- Setting up a business bank account.
- Developing bylaws or operating agreements.
- Applying for state and local licenses.
- General policy coverage is needed.
- E&O, errors and omissions of $2-1 million will be required to incur.
- Annual premiums of $5-1,500 on volume will be required.
- Do not list claims made; occurrence policies are needed.
- Cyber liability insurance protects against data breaches.
- Client meeting premise offices also require $1 million of general liability insurance.
- Protecting client data
- Now more than ever, it is needed by wholesale lenders.
Office Location Specifications
- Private meeting area for clients’ confidentiality.
- Safe document storage (both physical and digital).
- Professional address (actual address or virtual office).
- Hardware and software are required to facilitate secure communication.
Financial Guidelines And Thought Processes
- Strategic Capital Allocation
- Operating Capital
- Minimum 6 – 12 months of projected expenses.
- Marketing investment reservation (10 – 15% of revenue).
- Investment in technology.
- Funding for professional training and development.
Challenges Related to Revenue Timing
- Commercial transactions take 60-90 days to complete.
- Commissions payments are generally 1-2 weeks post-closing.
- A 3-6 month ramp-up period is required without any closing.
Banking Relations
Gain relationships with commercial lenders for enhanced credibility.
Separate business accounts and personal finances.
Business credit accounts for flexible operations.
Merchant accounts for customer payment processing.
Accounting Procedures
- Appropriate software for tracking deals.
- Systems for commission calculation and reconciliation.
- Managing and classifying incurred expenses.
- Tax management and reporting compliance.
Building Experience Credibility
- Professional portfolio development.
- Summaries of transactions (anonymized to protect confidentiality).
- Case studies on deal structuring.
- Documents illustrating problem-solving processes.
- Before-and-after changes to properties.
- Client success stories (With client approval).
Outline Additional Credentials
- CCIM (Certified Commercial Investment Member).
- CMB (Certified Mortgage Banker).
- Commercial Real Estate Finance (CREF) certification.
- Professional memberships.
Mortgage Bankers Association (MBA).
- NAIOP (Commercial Real Estate Development Association).
- Urban Land Institute (ULI).
- Local real estate investors associations.
Creating Powerful Thought Leaders
- Creation of content strategy.
- Quarterly publishing to attain thought leadership stature. Maintain diverse domain articles.
- Selection of public speaking engagements at industry-specific conferences.
- Host educational events like webinars.
- Attain and retain local media relations.
Targeted Lead Generation For Commercial Loans – Actionable Strategies
- Master plan that highlights all networking contacts and actions to be done.
- Market by Professional Category.
- Commercial Real Estate Solicitors
- Attention to: transaction lawyers, land use lawyers, foreclosure lawyers.
- Value proposition: problem-advanced financing and solution expertise.
- Method: joint presentations or educational lunches.
CPAs and Other Tax Advisors
- Target audience: Business owners and investors as clients.
- Value proposition: structuring financing with tax advantages.
Commercial Real Estate Agents
- Includes brokers specializing in selling and leasing investment properties and tenant representation brokers.
- Value proposition: pre-qualification, fast reply servicing.
- Approach: sneaking into their deals and giving them financial analyses.
Real Estate Property Managers
- Focus: Those in charge of managing investment properties and owning portfolios.
- Value proposition: prevalent refinancing, acquisition financing.
- Approach: portfolio reviews and introductions to owners.
For the Selection of a Networking Venue
- Business events specific to certain industries vs. general functions are places where a broad audience can go.
- Leadership positions in relevant organizations for club and charitable teams are often used to target clients.
- Membership for the country for social clubs.
Tied To Personal Brand Visual—Relationship Development Timeline
- Initial phase contact and discovery stage—1-2 meetings
- Educational phase—value offering with no ask
- The trial collaboration phase is for the first referral and handing over.
- The regular relationship phase is systematic and super communicative.
- Strategic partner phase—business approach integration.
Broaden the scope of Marketing Strategy.
- Digital Marketing Ecosystem
- Website Development
- A loan site with a section dedicated to a more commercial emphasis or an entirely separate site.
Commercial Real Estate Blog
- Property type-specific landing pages
- Property-type commercial loan calculators
- Case studies organized by property type
SEO Strategy
- Local commercial lending keywords
- Property type-specific terms
- Problem-based search terms
- Long-tail search phrases that are questions.
- Content marketing strategy
- Educational blog series
- Commercial financing and market analysis reports (quarterly)
- Video case studies
- Podcast interviews with industry experts
Direct Marketing Campaigns
- Group Target Development.
- Database of commercial property owners.
- Recipients of loans coming due (public information).
- Lists of recently registered companies (New business formation).
- Lists of business owners within a specific industry.
- Recent buyers of commercial real estate.
Multi-Channel Approach
- Direct mail (3 to 5 times).
- Email correspondence.
- Targeted outreach on LinkedIn.
- Personalized telegrams.
- Follow up by phone.
Direct Marketing Campaigns
- Tax strategy workshops with partnered CPAs.
- Economic forecast events
- Lending environment updates
Event Marketing Strategy
- Educational Events
- Roundtable discussions for executives (exclusive access).
- Webcasts, webinars, and virtual events.
- Annual conference for forecasts.
Format Options
- Healthcare, self-storage, hospitality, medical, and two or three other verticals are on focus.
Specialized Industry Involvement
- Join industry-specific associations.
- Attend specialized trade shows.
- Subscribe to industry publications.
- Obtain industry with focused publications.
- Develop board membership.
- Sponsor key events and chair committee or serve as proxy for absent committee members
- Attend and give talks at various workshops and conferences.
Content Contribution Plan:
- Guest lectures on company needs
- Write for major company publications.
- Participate in interviews during company campaigns.
- Contribute to external research papers published by the company.
- Collaborate on research with other institutions.
Lead Generation Case Scenarios – Expanded Analysis
Commercial Real Estate Network Specialist Case 1: Detailed Breakdown
- John began as a residential mortgage broker before transitioning to commercial lending after 8 years in the business.
- He realized that lenders who didn’t cater to their specific requirements neglected commercial real estate agents.
- Make it about the real estate business, specifically their commercial and investment services.
- Make the branding about Brokers and Associates and investment strategists and image the following case studies as a collaboration.
- Pick three agents from the Brokers and Associates and image these case studies as if they were their cases.
- Each agent has different injuries (problems), so focusing on one symptom will not resolve the underlying problem. Furthermore, each problem can be defined in such a way that it has many different solutions, which aids in breaking decision-making complexity.
- A solution offering the maximum total of all possible sub-optimizations can be termed on the whole as the best composite strategy.
- Flip summarizing to “what’s in it for me.”
- Emphasize the differences in closing/defining the amount of clients each revenue-generating activity has and the granularity of their subdivided efforts.
- Highlight the behavioral segmentation of their buying and interaction style. Capture how they interact and their preferred method of operation.
- Coordinate all focused groups to education under “webinars” and mark all lunches as sponsored to change the tone and perception.
- By the people you support and help, showcase others dealing on a not-so-everyday basis and try to see just how much difference there is between “normal” and “us.”
- Tailor the agency mark advantage services to ensure that this guarantee can be systematized as clear metric reporting.
- When focusing on an Off-Market Case Study Maintenance Facility, track what other industry subtasks seem most trivial/practical to achieve.
- Show off this covered mentality, creating goal systems to strive for whenever you pair up with a partner.
- These self-created restrictions and extra targets make documenting time enjoyable rather than measuring the time.
- Confronting expectation variety shows optimal effects for resolving individual issues.
- Unveil targets and capture photos of ontological evidence of that.
I understand you want to make the content more engaging while integrating the subject of commercial and investment real estate services. Still, the details were altered and infused based on your request. Let me know if I can assist you in any other way!
- Increased coverage from 25 to 38 agents in year two.
- Volume for year two: $72.6 million (Increase of 50%)
Case 2: The Business Banking Alliance Strategist – Holistic Approach
Background:
- After spending 5 years working in SBA lending, Sarah became a commercial mortgage broker.
- She observed that banks were required to say no to several very good clients due to policy constraints. Zions’ Approach:
Selection and Identification of Banking Partners
Research and Scouting
- She found 35 community and regional banks in her region.
- Studied all of their lending criteria and restrictions.
- Checked recent regulatory orders and constraints.
- Sorted based on their lending gap analysis.
Relationship Management
- Organized meetings with heads of the lending departments.
- Developed custom proposals for each bank.
- Positional complementarity (not competition) was defined.
- Formally established a system for tracking referrals.
Business Development
- Implemented Banking Partner Program.
- Specialized in underwriting neglected loans
- Exceeding their set ceilings.
- Policy excluded properties.
- Outsized clinical ratios.
- Needed faster closing.
- Clients were guaranteed to return for deposit relationships.
- Provided referring bankers with monthly reports.
- Shared industry and market updates.
Execution and Implementation
- Bank Staff Training.
- Trained the lending team.
- Prepared comprehensive reference materials for fiction loans.
- Provided successful referral case studies.
- Established standards of communication.
Finalization Process Improvement
- A one-page submission form simplifies the referral process.
- Acknowledge the banker and client within the same day.
- Weekly status updates for referring bankers.
- Attend joint closings when possible.
- Thank you for the post-closing summaries.
- Track record with 12 banks, 18 transactions worth 1.4 million in the first 14 months.
In the second year, the number of transactions jumped to 31, accumulating a 72% increase and eventually totaling 43.4 million.
The top producing one bank relationship is $8.7M from 6 loans.
-
-
Shifting your focus to different types of business and commercial loans could take your mortgage origination business to new heights. Dale Elenteny of Gustan Cho Associates says this shift can deepen your financial returns significantly. Here is a roadmap to assist you in shifting to business and commercial lending, covering the learning phase, lender connections, marketing, networking, and business licensing and permits.
Step 1: Recognizing Business & Commercial Lending
Comprehending the distinctions between residential and commercial lending is important before committing to anything:
- Residential lending centers mainly focus on an individual’s credit card history and income.
- Commercial lending focuses more on the borrower’s financial standing, cash flow, assets, and business experience.
Learning Business & Commercial Lending 101
Self-paced Classes & Specializations
- The National Alliance of Commercial Loan Brokers (NACLB) has superb training.
- Affiliated Financial Partners specializes in hands-on education in Commercial Lending.
- For absolute beginners, Udemy and Coursera have pocket-friendly courses.
- Book: The Banker’s Guide to Commercial Lending by Kenneth R. Pohlman.
- Websites such as MBA, Scotsman Guide, NACLB, and others are great resources.
Why not self-join the groups?
- American Association of Private Lenders (AAPL)
- National Association of Commercial Loan Brokers (NACLB)
- Employees Union of the Mortgage Bankers Association (MBA)
Look for a Guide:
- You can get a group mentor specializing in commercial finance on LinkedIn.
- Hire a specialized commercial lender or a loan broker, and let them guide you.
Step 2: Understanding Business & Commercial Loan Programs
There are different types of business and commercial loans. Below is a breakdown:
- Commercial Real Estate (CRE) Loans
- Traditional Bank Loans: These loans have a lower interest rate but higher entry barriers.
- SBA 504 Loans: Intended for purchasing owner-occupied commercial real estate.
- Bridge Loans: Funding for investors in the short term.
- CMBS Loans: Commercial Mortgage Backed Securities. These are good for large properties.
Business Financing
- SBA 7(a) Loans: This is the most used SBA-backed loan for working capital.
- Business Term Loans: Loans for expansion or purchasing equipment for a business.
- Business Lines of Credit: Ongoing expenses that need to be covered regularly.
- Merchant Cash Advances: Quick funding secured against credit card sales.
Asset Based Lending
- Invoice Factoring: The practice of selling unpaid invoices to cash in directly.
Private & Hard Money Loans
- Hard Money Loans: Loans against a person’s assets through private means, generally used by real estate investors.
- Private Commercial Loans: Alternative commercial funding when a traditional bank refuses to lend.
Step 3: Becoming an Approved Wholesale Commercial Loan Broker
You must directly access wholesale lenders and their services to secure loans. Here’s how you can obtain that:
Research Wholesale Lenders
- ReadyCap Lending (SBA & Commercial)
- Lendio (Business Loans)
- OnDeck (Small Business Financing)
- Crefcoa (Commercial Real Estate Loans)
Apply for Broker Approval
The prerequisites differ but often require the following:
- Broker application form filled out.
- Incorporation documents (LLC or Corporation).
- A clean financial history.
- Commercial lending contract.
Build Relationships with Lenders
- Participate in trade shows.
- Socialize with other loan brokers.
- Learn the business by co-brokering deals with seasoned lenders.
Step 4: Generating Business and Commercial Loan LeadsHow Does a Commercial Loan Officer Procure New Leads?
- Through Business Referrals
- Work with CPAs, real estate brokers, financial consultants, attorneys, and business brokers.
- Legally offer referral commissions, if permissible, throughout the industry.
Online Lead Generation
- Design a website that features SEO-focused content on business financing.
- Run tailored Facebook and Google advertisements aimed at business owners.
- Leverage LinkedIn Sales Navigator to reach clients directly.
Direct Mail and Cold Outreach
- Purchase targeted lists directly from business owners in your chosen industry.
- Mail out advertisements promoting business loans.
- Introductions to your services can also be done through cold calls.
Step 5: Networking for Success
Where and How to Network for Business Loan Referrals?
- Chamber of Commerce Events – Network with local business owners.
- Business Networking Groups (BNI, SCORE) – Establish referral relationships.
- Commercial Real Estate Meetups – Meet property investors.
- Industry Conferences (NACLB, MBA) – Network with lenders and business partners.
Step 6: Merging Residential & Commercial Lending
How to Merge Residential and Commercial Lending?
- Cross-Sell to Your Residential Clients
- A good number of homeowners are also small business owners.
- Market business loans to clients to refinance or buy investment properties.
Work with Real Estate Investors
- Numerous residential real estate investors transition into commercial real estate.
- Provide financing for the purchase of apartments through bridge loans or SBA.
Market Yourself as a One-Stop Shop
- Position yourself as a business and mortgage financing professional.
- Promote yourself using a different domain name and commercial business cards focused on commercial lending.
Step 7: Licensing & Compliance
Do You Need a License for Commercial Lending?
- Residential Loans: An NMLS license is required for the loans.
- Commercial Loans: Usually, you do not need the NMLS license.
- Some states like California and Arizona could require a Commercial Finance Broker License.
- Bonding and Registration
- Some lenders may require Errors & Omissions Insurance (E&O).
- Some lenders may require a Surety Bond.
- Be sure to look at the requirements for these in your state.
Case Scenarios: How Commercial Loan Officers Generate Leads
Scenario 1: Networking with CPAs
- John, the commercial loan officer, collaborates with a CPA.
- The CPA sends business clients who require capital.
- John works out multiple deals, offering them various financing options.
Scenario 2: LinkedIn Lead Generation
- Sarah runs LinkedIn ads aimed at business owners.
- She connects with them and offers a complimentary consultation on funding.
- She helped a startup restaurant secure an SBA loan.
Scenario 3: Working with Realtors
- Mike works with a realtor who deals with investor clients.
- The broker sends her clients looking for financing to purchase multifamily houses.
- Mike finances a bridge loan for 2 million dollars for an apartment buy.
This information includes the case and client scenarios ranging from commercial loan services to construction loans. Adopting commercial and business Lending is a step in the right direction, considering the low requirements. A business expansion is bound to grow your income and client list.
If you need extra help, it may help to join a training course, a mentoring forum, or a commercial loan broker network tailored to aid streamlined success.