Mr. M. came to Pacific Private Money when his mortgage broker was unable to offer him a loan for the purchase of a primary residence in Petaluma, California. Small Business Owners/Sole Proprietor loan qualification challenges: Mr. M is a self-employed borrower with multiple business ventures. Like many business owners, his income and expenses can swing wildly from week to week or month to month requiring a constant shuffling of funds, not only between accounts, but also between companies. In addition, Mr. M. is a savvy business owner and investor who does not keep his capital idle, investing his capital when opportunities arise versus keeping it in a checking or savings for any meaningful length of time. This presented a challenge for him when he went to a conventional lender. Financing Challenges: A common underwriting guideline conventional lenders require when borrowers list the amount of their down payment is funds source and seasoning. Banks typically need to know where the borrower’s funds are coming from and require the funds to be “seasoned”, essentially sitting in the same account for a minimum number of months. These requirements are often too onerous for the self-employed. Pacific Private Money Fast & Easy Bridge™ Loan Program PPM was able to provide Mr. M. with their Fast & Easy Bridge Loan for $500,000 for the purchase of the Petaluma property valued at $725,000. As private lenders, PPM is able to make a more subjective evaluation of a borrower’s qualifications compared to banks. Evaluating the borrower’s “story” in addition to normal due diligence often uncovers borrowers who don’t fit banking guidelines but are otherwise low risk borrowers. With PPM’s loan Mr. M. was able to purchase the home. Within a year, he was able to refinance with his mortgage broker into a long term low interest rate conventional loan. Everyone won! Closing Commentary Mr. M’s scenario is actually quite common. Many small business owners continuously have to manage peaks and valleys across income sources and assets. Conventional lenders often have a challenging time underwriting these scenarios because of funds seasoning. Again, PPM is one of a small number of private lenders in California who have the expertise and resources to properly underwrite and originate consumer loans for real estate. PPM’s consumer bridge loan can apply to many scenarios where speed is required, or where conventional financing is not an option. Because PPM ALWAYS refers borrowers back to the original referring source (mortgage broker or Realtor), we are viewed as “friendlies” by the mortgage industry. PPM has institutionalized a process to always keep the referral source updated on the maturity status of the borrower’s PPM loan in preparation for the eventual exit out of PPM’s loan and into the referring mortgage professional’s conventional loan.
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