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
--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
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
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
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
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,
etc.to 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
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
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
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]