Why Small-Balance Commercial Real Estate Loans?

Mortgage brokers must often think outside the box, to find the right financing solutions for their borrowers. Small Balance CRE loans are one of those unique and esoteric products that represent outside the box thinking. As interest rate volatility and issues with affordability have negatively impacted consumer appetites for residential financing, new opportunities lie with small-balance commercial mortgages.

Yet, some brokers are hesitant to enter the space. Reasons are numerous but most often a lack of experience or understanding, of commercial real estate, represents the greatest barrier to entry. Having limited options for reliable capital is also cited as a primary reason for hesitancy. This is exacerbated by the fact that many lenders shy away from small-balance commercial loans due to their perception that these loans represent enhanced risk. However, there are go-to small balance commercial lenders in the marketplace and Stronghill Capital is at the top of that list. Stronghill’s streamlined product offering is designed to give you the competitive advantage you need to easily help more clients and win more business.

Market conditions have never been more favorable, to explore how small-balance commercial real estate loans can increase your bottom line.

What is a Small-Balance Commercial Loan?

Small-balance commercial real estate loans are typically defined as transactions less than $5MM in size. These loans are backed by multifamily, mixed-use, office, retail, warehouse/light industrial, self-storage, mobile home communities and other similar property types. While residential lending is normally restricted to 1–4-unit dwellings, small-balance commercial loans can be utilized for a multitude of property types, making them a highly flexible financing solution.

Unlike the complicated application and closing process of large-balance commercial lenders like Life Insurance Companies CMBS/Conduit platforms, Agency Originators and Banks, small-balance lenders (such as Stronghill) offer a simplified process which makes the approval process much easier.

Stronghill Capital’s commercial lending options are designed for predictability and efficiency. The application process is extremely straightforward, affording investors and small business owners the ability to advance their financial objectives.

Most small-balance commercial real estate loans focus on three primary factors. Property cash-flow, borrower creditworthiness and overall capacity to service the proposed debt.

Small-balance CRE loans provide the flexibility for borrowers to diversify their real estate holdings, across multiple asset classes, or to access equity in their current portfolio and turn it into liquidity.

Overall, the small-balance commercial real estate loan market has seen tremendous growth. Investors, traditionally focused on residential real estate, are starting to lean into commercial as a primary alternative. Getting in now can mean bigger profits long-term.

How to Sell

Historically an underserved market, small balance CRE remains fragmented and flush with opportunity. By adding a commercial product and diversifying what you offer your clients, you’ll be well positioned to weather these turbulent times.

Small-balance commercial loans offer a natural progression from residential lending, getting started is easy.

  • If you already have a residential book of business, start by leveraging your database. Look for clients who currently own investment real estate.
  • Identify those individuals that are self-employed and might be interested in purchasing or refinancing their business location.
  • Take advantage of key COI (centers of influence) relationships such as attorneys, financial planners, accountants, realtors and builders. These can help you broaden your referral network and capture new leads.
  • If you are hesitant about entering the small-balance commercial arena, remember Stronghill is here to help. Feel free to leverage our expertise to answer any questions you or your clients might have.
  • Lastly, it’s always important to work with the right partners, who offer the right products. On this front the choice is easy, Stronghill has spent countless hours developing a complete solution for small balance CRE lending.

Why Stronghill Capital

Making the strategic decision to choose Stronghill Capital as your small-balance CRE loan partner, will help you grow your business. Stronghill empowers our clients with flexible loan options and a reliable process, providing them with the competitive advantage they need in today’s marketplace.

Our commonsense approach allows for creative solutions, even when faced with challenging scenarios. We review each file on a case-by-case basis, giving you a greater chance to close more of the deals in your pipeline.

With decades of experience and a national footprint, Stronghill Capital offers competitive rates and attractive terms that make it easy for brokers to expand into small-balance commercial lending.