How a bank loan works
A bank lends its own money under its own credit policy. If your deal fits that policy, a bank you already work with can be a great option. If it doesn't, because of property type, location, leverage or a wrinkle in your story, the answer is no, and you start over somewhere else.
How a commercial mortgage broker works
A broker doesn't lend. A broker knows which lenders are actively funding which deals right now: banks, credit unions, life insurance companies, CMBS, debt funds, SBA lenders and private lenders. The broker packages your deal and puts it in front of the lenders most likely to say yes, so they compete for it.
| Going to your bank | Using a broker | |
|---|---|---|
| Lenders reviewing your deal | One | Many, matched to your deal |
| If the answer is no | Start over | Move to the next best lender |
| Paperwork | Repeat for each lender you try | One package |
| Comparing offers | Hard to know what's competitive | Written terms side by side |
| Cost | Lender fees | Lender fees, plus a broker fee in most cases |
When a broker usually wins
- Your deal has a complication: vacancy, a tax lien, a tenant issue or a tight timeline.
- You're financing a specialty property like a hotel, self storage or a gas station.
- You want to know you got the best available terms, not just one offer.
- Your own bank already said no.
When going direct can make sense
If you have a strong relationship with a bank that actively lends on your exact property type, and the deal is clean, going direct can work well. Even then, many borrowers have a broker check the market so they know their bank's offer is competitive.
Real examples
Recent OCC Lending closings include a hotel renovation loan other lenders declined over an IRS tax payoff, and a retail purchase where the first lender denied the deal because renovation permits weren't ready. See more recent closings.