The good news is that the loans tend to be larger than home loans and brokers are fishing in a bigger pond where there is less competition.
However, the loans are more complicated and so there is a learning curve.
No one property description fits all
First, when considering new opportunities, there is no one property description that fits all commercial loans. To one broker it can be a retail shop and upper parts, to another a portfolio of ASTs and to a third a warehouse or factory; which is it?
More questions come thick and fast. Is it for an owner-occupier or for an investor? Is it for the property industry or the business community? All pose opportunities for enterprising brokers.
How to offer your client smooth service
- Check the adequacy of security offered, the borrower’s ability to service interest and the certainty of the exit route
- Be prepared to act as the facilitator and negotiator – diplomacy is key. The process sounds simple and so it should be if the borrower, broker, two firms of solicitors, the valuer and lender are all pulling in the same direction, but rarely is this the case and so much of brokers’ and lenders’ time is spent accelerating the performance of all parties
- Make sure the lender specialises in commercial loans and has the funds available and is not a blender hoping he may just pull off the impossible.
- Deal with only established lenders and check the case studies on their websites – see that they have done it before, not just occasionally but all the time.
- Give the lender what they ask for at the outset, properly presented and in one package: it delays the process to drip feed the information.
- Give the lender time to review the material, but not too long – 48 hours is more than sufficient for a case to be reviewed and indicative terms issued subject to credit committee approval.
- Meet with the lender, sit around the table – broker, borrower and lender, discuss the proposal, answer questions and resolve issues. In this way, the lender can obtain its credit committee approval. On their acceptance, instruct their solicitor and valuer – all parties working in parallel – no one waiting for the other.