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New Jersey industry appointments update - 7/5/2007

Jul 04, 2007

Navigating success in small commercial lendingThomas BrubakerInterBay Funding LLC, commerical mortgage market, small commercial loans Even if residential lending will remain the mainstay of your business, youll reap added bottom-line growth in the commercial sector only if you accept the challenge of extended days and extra work, in addition to your normal business processes. --Thomas Brubaker, Vice President of Marketing InterBay Funding LLC As the residential mortgage market continues to change, brokers eager to diversify have found a ready source of new business in brokering small commercial loans. Maybe youre among those ready to jump into this new revenue stream. But you might be wondering how to successfully navigate the unfamiliar waters of small commercial lending. Will your strengths in residential brokering lead to smooth sailing in small commercial? The answer is yes, as long as you bring these key attributes aboard. Commitment Commitment might seem a given for success in any field, but take just a moment to consider the implications of the word commitment. It means a lot of hard work, dedication, an openness and desire to embrace new ideas and concepts, and the courage to invest yourself in success. If you have a track record of investing your time and effort into building your residential lending business, youll need to mirror that commitment in your new commercial lending practice. Whether youre exploring new business-building networks and relationships or learning about small-balance commercial products, plan to devote a portion of your time each day to learning and expanding your knowledge. Even if residential lending will remain the mainstay of your business, youll reap added bottom-line growth in the commercial sector only if you accept the challenge of extended days and extra work, in addition to your normal business processes. Certainly, youll need to climb a learning curve, but keep your eye on the prize and enjoy the journey of growing your commercial lending skill set. The good news is that many commercial lending companies offer training designed to introduce brokers to the arena. Take full advantage of these, as well as the continuing education sessions offered by national and local mortgage broker associations. If youre up to the challenge of making this commitment, put sufficient resources into your effort. This means devoting time, money and staff to commercial opportunities. Give the sails of your new commercial ship the fullest possible wind. New marketing strategies Marketing for commercial borrowers requires different strategies than marketing for residential borrowers. For example, calls from commercial borrowers will not come flooding in when the Fed reduces rates. Proactively and aggressively pursue commercial borrowers. This means walking around your community, getting to know small-business prospects and doing some marketing. The easiest and least expensive prospecting opportunity is simple networking. Everywhere you go, spread the word that you now originate commercial loans, with colleagues you know that own small businesses, at the gym or club and even with neighbors and fellow Little League parents. Make a point to meet as many commercial prospects as possible face to face. Drop in on businesses throughout your local commercial district. Even the small businesses you patronize every day, from the deli to the dry cleaner, are prospects. Be sure to take literature, brochures or other leave-behinds that explain the value of your services to business owners. Another way to market for commercial leads and referrals is to purchase a list of business owners or commercial property owners. The list industry is far more advanced with consumer data than with business lists, but with some strategic guidance, you can purchase a premium list of potential commercial borrowers. Try a variety of contact methods and frequenciesdirect mail, telephone contact, approach the targets on your lists, and be diligent about keeping your lists updated and refreshed with any new details or information that you learn. This will help you identify additional opportunities to reach out to your prospects. Just as youve successfully done in working with residential borrowers, come up with your own unique marketing techniques. Youll learn over time how commercial borrowers work and what motivates them. This will enable you to position your messaging in the places where business owners go for trusted financial information and advice. Strong selling skills Strong selling skills are another asset that may seem like a given. But consider this: Its relatively easy to sell your 6.5-percent rate to a homeowner who was at 8.75 percent. But commercial borrowing has a different and extensive set of dependenciesthe businesss cash flow and return on equity, to name just two. Youll need to understand these benefits and how to sell them. Heres a prime example. A pizza shop wants to expand. It borrows $200,000, adds another oven and 20 more seats. The upgrades attract more customers, and sales grow. Youll need to be able to skillfully paint a picture that illustrates how the increased sales and additional income will offset the cost of the capital being borrowed. Additionally, strong selling is required to bring the commercial borrower to focus on the payment and not the rate. Commercial borrowers will want to know that they can comfortably afford the monthly mortgage payment within their cash flow. This factor should be a key point in your selling. As with all of the traditional selling models, urgency and persistence are critical. However, a recent survey of commercial borrowers revealed dissatisfaction among commercial borrowers with the amount of communication and follow-up from their brokers. If you can wow them with your service, the sale process will be much easier. Youre about to set sail on a rewarding journey into small commercial lending, a journey offering lucrative compensation and the security of diversification for your business. So haul up your anchor, unfurl your commitment and chart courses for new marketing and selling skills. Theres an ocean of commercial opportunity awaiting you. Tom Brubaker is vice president of marketing for InterBay Funding LLC, a commercial mortgage lender providing capital to small business owners and commercial property investors throughout the United States, Canada and the United Kingdom. With over two decades of experience in financial services marketing, Tom assists brokers in developing effective marketing strategies. He may be reached at [email protected].
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