Chris Lehnes, Vice President, CIT Small Business Lending Corporation
As published in Scotsman Guide's Commercial Edition, February 2005.
It is no small feat to keep track of the various classes of financing available to real estate buyers: prime, subprime, high LTV, construction, etc. But failing to do so can result in lost income if you are unable to place clients seeking financing with the product that best suits their needs.
While owner-occupied properties may not be your bread and butter, every broker occasionally comes across such opportunities. Having contacts in this market allows you to win and retain customers who will come back to you for their next real estate financing needs because of your demonstrated broad knowledge of the real estate industry.
In order to effectively place owner-occupied properties, every commercial mortgage broker should become familiar with Small Business Association (SBA) loans. SBA 7(a) loans are extended by a bank or licensed non-bank lender to a small business owner. The SBA guarantees a portion of the loan being made to entice the lender to extend credit to small businesses. Loan guarantees can range from 85 percent for loans less than $150,000 to 75 percent for loans from $151,000 to $2,000,000. Under the SBA 504 program, loans can be as large as $10,000,000.
As you can imagine, any government program is going to have a lot of rules-rules about who is eligible for financing, rules about what can be financed, rules about what interest rate can be charged-more rules than I could ever convey in this brief article.
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