REQUIRED READING: Strategies For Establishing A Powerful Small-Balance Program


With the continuing unpredictability in the mortgage industry, the time has never been better for brokers to take a smaller approach to bigger success by pursuing the revenue streams available in small-balance commercial lending.

This underserved market – particularly loans of $1 million of less – offers consistent and sustainable opportunity, and an ever-larger number of mortgage professionals are expanding into small commercial to realize the higher profitability.

But no broker achieves big success in small-balance commercial without minding the basics. Success will not happen overnight or without your self-preparation and commitment. The good news is you can find plenty of valuable support and guidance from lenders that are as committed to your success as you are.

First, if the diversification and alternative income sources of small-balance commercial lending appeal to you, be prepared to educate yourself: Any broker seriously considering a move into small-balance commercial must make training a priority.

Fortunately, you can take advantage of high-quality education, such as that offered by many small-balance commercial lenders. In particular, look for a lender that offers marketing programs, in-field support, live seminars and innovative online tools for training, loan origination, marketing support and other services.

At the same time, participate in training offered by national and state associations. As you learn more about the business, you will continually gain important insights about partnering with lenders that will support you and help streamline the loan process – and will help you make more money faster.

Identifying good lenders to work with is an important foundation to building a successful small-balance commercial practice. For example, some brokers approach their initial small-balance commercial deals by identifying business owners or borrowers who need funding and then trying to find a lender to link them with.

A better approach is to identify lenders with quality products for you to offer, and then pursue lending opportunities that match those criteria.

You will find that strong small-balance commercial lenders share your interest in helping you build your success on sound fundamentals. Your lender should have experience working with brokers new to small-balance commercial lending and be ready and willing to assist you throughout the process – particularly during your initial small-balance commercial lending experiences.

Available assistance should include readily available support and answers to your questions, in addition to easy-to-navigate loan processes. You also want a lender that has proven superior customer service practices.

Brokers who leverage an experienced and streamlined small-balance program can harness efficiencies that simply did not exist in the market as little as five years ago – another reason that pursuing new business in small-balance commercial is especially worthwhile these days.

Building the business

Beginning with your very first deal, the success of your small-balance commercial venture will depend on your commitment. This connection may appear obvious, but many people do not fully appreciate what commitment embodies: It is more than just nose-to-the-grindstone effort. Commitment is also genuine interest in your borrower's success, a willingness to work with your lender to learn new ideas and concepts, and the courage to invest in yourself.

If you're a broker who has devoted a great deal of time to building a successful lending business, mirror that dedication as you launch into small-balance commercial. Devote a slice of each day to it, whether you're networking or learning about new products.

Perhaps other lending niches will remain your main focus, but don't let your rich small-balance commercial potential escape because it requires extra work in addition to your normal business flow.

If you have the courage to commit your time and energy, back it up with an investment. Specifically, allocate your time, money, staffing and other resources. Again, lenders will be eager to provide you more marketing support and assistance when they know you are committed to success.

If not, it may be much tougher for your venture into small-balance commercial to yield the big results of your dreams.

Additionally, you must address certain requirements within your individual plan of action. If you are moving into small-balance commercial brokering for the first time, the basic functions of the business do not necessarily change. But some of these aspects – especially marketing – must be expanded.

To win your fair share of small-balance commercial business, start by cultivating a bias for action. There are myriad ways to effectively market your ability to deliver solutions to businesses that are not eligible for bank financing, but merely waiting for your phone to ring isn't one of them. Instead, you need to market yourself.

Before initiating a marketing program, take the time to plan. Identify the target audiences at whom your marketing effort is aimed, how you plan to reach them, and what you want them to do after being contacted. From the elementary to the sophisticated, a marketing plan needs well-defined goals and objectives to which results can be compared.

With experience and consistently applied energy, you will soon build a reliable portfolio of winning marketing techniques. Developing such a diversified portfolio is an important consideration in your long-term success, because a marketing plan that embraces a number of different tactics is far likelier to build and grow your business than reliance on a single silver bullet.

At the same time, take care to develop marketing plans that don't stretch you and your resources too far. Design your marketing effort from the start to assure that you can execute every step in the process – from launch, to tracking, to changes in messages or approaches – in a timely and effective manner.

When it comes to marketing, there is no better place to start than with word of mouth. To build a productive small-balance commercial business, you must inform the network of contacts you have built from your earlier mortgage experience that you are available to work with small-business owners and investors.

These measures certainly can begin with an investment of shoe leather, such as walking your community's commercial district to deliver brochures and business cards. Marketing your small-balance business also involves building potentially lucrative referral relationships.

For example, professional service providers of all stripes – from attorneys to financial advisors to accountants – are serving the same business owners that you will want to target. Building and maintaining strong relationships with these trusted advisors can thus generate a mutually beneficial business symbiosis.

It is important to note that referral relationships require time and patience to build. You will likely encounter widely varying degrees of knowledge and understanding among professional advisors regarding the landscape of small-balance commercial lending sources.

Invest the necessary time to familiarize each potential referrer to the types of clients and properties you are able to service. Again, keep in mind the importance of effectively matching the needs of your prospects with the products and services offered by the lenders you have chosen to work with.

An additional essential step is to follow up regularly with your referral sources and – whenever possible – to return the favor by sending new clients and customers to their door.

The best referrer relationships result not only in the growth of your small-balance commercial lending portfolio, but also in the expansion of profit opportunities for the accountants, insurance agents and financial advisors whom you will recommend to your growing small-business owners and borrowers.

Finally, a commitment to selling is crucial. Your existing success as a mortgage professional is no doubt due in some measure to your selling skills. You will find those selling skills in even greater demand in the small-balance commercial sector.

If you think this is a given, consider the following: When originating small-balance commercial loans, you will find small-business owners and other borrowers grappling with a business decision that is affected by such factors as cashflow, return on equity, investment opportunity and more. Therefore, you need to learn and master the selling of these benefits.

A good salesperson will embrace the dreams of the small-business owner or borrower and work hard to understand what the loan means to the future success of your customer. Doing so may, in fact, prove to be the biggest single commitment you can make to drive your sales prospect to closing.

Always strive to exceed the service expectations of your customers. Surveys of commercial-mortgage borrowers have shown dissatisfaction with the levels of communication and follow-up. If you can wow them with your service, the sale process will be much easier.

But is all of this work for a smaller transaction worth it? Absolutely. With the lucrative compensation and security of knowing that you offer multiple lending products, going smaller in small-balance commercial can be key to making your future a big success.

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. Brubaker can be contacted at

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