The payoff is three-fold: incremental income from deals that previously would have been passed over; improved customer-relationship management as a result of serving additional needs; and more referral opportunities.

Easing the transition

Brokers new to the commercial industry are also discovering these programs facilitate a smooth transition into the business. Some small-balance lenders have modeled their approach after the residential mortgage process -- from forms to underwriting to closing. This can make commercial transactions more comfortable for novices. Brokers can gain valuable experience by leveraging these innovative programs to close small-commercial deals.

It is also interesting to note that the small-balance category encompasses a wide variety of property types as well as programs that provide alternatives to traditional financing options. These attributes present opportunities for brokers to specialize in areas that make sense for their business.

For example, some small-balance loan programs are favorable for owner-occupied properties, presenting a viable alternative to Small Business Administration (SBA) programs. Or you might look for a program that lends on unique property types and position yourself as an expert (through marketing and networking efforts) on financing for a particular property type.

Creative partnerships

Small-balance-commercial loans can also present opportunities for brokers to align themselves with referral partners and other industry professionals. Banks and credit unions, for instance, frequently encounter small-commercial loan opportunities they cannot serve, but they want to keep their depositor base happy by offering financing alternatives.

In the same manner, it may be beneficial for brokers to team up with a company that offers only SBA loans. That way, you can provide a home for the investment-property deals they cannot originate. By talking with loan officers at these institutions about their turn-down business, brokers can build promising referral sources.

Brokers who prefer to keep large-balance loans as their sole focus may want to consider an additional incentive of small-balance programs. Some lenders now offer referral programs whereby they handle the entire transaction but allow the referring broker to receive financial compensation at closing. This is an attractive opportunity for commercial brokers to serve clients while adding a revenue stream that does not require additional work.

Ultimately, small-balance-commercial deals can be a productive and valuable part of any commercial broker's business mix.

Salomon Wancier is senior vice president, marketing communications, for Silver Hill Financial, a nationwide wholesale commercial real estate lender with a common-sense approach to small-balance loans from $100,000 to $1.5 million. Look for Silver Hill's new Broker Referral Program this month, offering commission for closed deals referred directly to Silver Hill, which handles the entire transaction on the broker's behalf. For more information, visit www.silverhillfinancial.com or call (888) 988-8843.

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