SBC
A commercial lender requires special-form building coverage at 100% of the insurable value of the improvements (or the unpaid principal balance on an agreed value basis), claims paid on a replacement cost basis, a deductible no greater than 10% of the insured value of the building for all perils, coinsurance at 80% or higher or an agreed amount endorsement, and general liability at $1MM per occurrence and $2MM aggregate per location. Flood coverage applies in a special flood hazard area, and the lender must be named as mortgagee, loss payee and additional insured on the correct ACORD forms. This is a closing-delay topic: get the requirements to your agent before the binder is ordered.
September 1, 2026
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A judgment or collection matters on a commercial loan file only if it is material, and our program defines material for judgments at $5,000 or more. A charge-off is tested on two axes instead of one: it disqualifies only when it is $5,000 or more and less than 12 months old. That difference means age cures a charge-off but does nothing for an unpaid judgment. This page explains the thresholds, what has to be resolved versus what can remain open, and where the commercial rules diverge from the 1-4 unit DSCR program.
September 1, 2026
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You can put several small residential properties under one commercial loan only if they are contiguous. A bulk residential portfolio whose properties are scattered across different blocks or neighborhoods is a named ineligible property type on our small balance commercial program. A contiguous portfolio has its own category, requires a commercial component on at least one parcel, and is valued as a single entity rather than as the sum of individual house values. Scattered houses are not a dead end, but they belong on a different guideline.
September 1, 2026
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Tax escrow is required on every loan and collected at closing. Insurance escrow is collected on most loans, but is not required if the policy is a blanket policy covering other properties or the operation of the business, or if the borrower requests a waiver and the FICO is 700 or higher. Our minimum FICO is 650 for the primary guarantor and 640 for others, so a waiver asks for meaningfully stronger credit than approval does. A waiver does not save you the year-one premium, which must be paid in full at closing either way.
September 1, 2026
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One category of criminal record makes a borrower ineligible in our small balance commercial program: a felony conviction related to financial fraud, where the release date falls within the past ten years. That is the entire criminal-history rule. The background search runs on every file and covers all parties who control the borrower, anyone owning 25% or more directly or indirectly, and every entity in the ownership chain. This page states the rule exactly and is equally clear about what the guideline does not say.
September 1, 2026
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Automotive is an eligible Tier II property type under our small balance commercial program, including shops performing major mechanical work. What disqualifies a property is narrow and specific: a gas dispenser or underground storage tank, a purpose-built quick-lube or an oil-change facility with a below-ground pit, and a used-car lot whose land-to-building ratio reads as a land loan. Every property is screened by an Environmental Transaction Screen that reviews current and historical uses, and equipment and business value are excluded from the appraised value the loan is sized against.
September 1, 2026
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Rent-controlled and rent-stabilized properties in New York are ineligible collateral under our small balance commercial program, for both Multi-Family and Mixed-Use. Separately, an individual cannot be the borrower on a New York property at all, and New Jersey carries a narrower version of the same restriction at six units or fewer. Here is what each rule reaches, and why regulated rent caps the value along with the income.
September 1, 2026
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On a building with five or more residential units, units used for short-term rental are deemed vacant. The income does not help you qualify, and the units count against the 75% occupancy the property must clear, measured over the 90 days before you apply. That is the opposite of the 1-4 unit investor side, where short-term rental income is usable at a discount. The dividing line is the unit count, not the behaviour.
September 1, 2026
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One 30-day late mortgage payment does not disqualify you. Our small balance commercial guideline allows no more than one mortgage late in the last 12 months, or two in the last 24, on a residential and/or subject property mortgage — the standard written in shorthand as 1x30 and 2x30. This page decodes that notation, identifies which mortgages get counted and whose history is tested, explains how the history is verified, and sets out what happens when a file is over the line.
September 1, 2026
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An outstanding tax lien does not automatically disqualify a commercial loan. Our guideline gives it three ways through: payoff at closing, an established payment plan with at least six months of payment history, or an outstanding amount under $2,000. This page explains the threshold, what the payment plan has to show, and why a lien recorded on title is a separate gate from a lien filed against the guarantor personally.
September 1, 2026
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The No Doc Streamline program requires a 700 minimum FICO and a 600 Optic Score, caps leverage at 75% LTV on a purchase and 70% on a rate-and-term or cash-out refinance, and tests the property at 1.00x DSCR using the rents the appraiser used to derive value. It is available on both investor and owner-occupied properties, and market rents are used for qualification in all cases. No personal or business tax returns are required, but the credit, asset, reserve and entity documentation still is. A file that misses coverage under the complete or bank statement program may be converted to No Doc and adjusted to these guidelines.
September 1, 2026
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A commercial cash flow analysis counts only rental income that contributes directly to value or is stable and typical in the marketplace. Cell towers, billboards, trailer and outside-storage rentals, and any extraordinary or non-recurring source are excluded from net operating income. On the operating-business side, gains from asset sales, insurance claims, settlements and investment income come out too. Here is the full list, the principle behind it, and what to do when a large share of your revenue falls in an excluded bucket.
September 1, 2026
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A few NSFs on your business bank statements will not automatically decline a bank statement commercial loan. Overdrawn accounts count as NSF even when overdraft protection covered them, and a returned check that never took the account negative is not an NSF at all. What decides the file is the cause — a customer's bounced deposit reads very differently from your own account management — and how the overdraft was cured. Business savings or a sweep reads differently from a credit line, a credit card or personal funds, and to qualify there cannot be a fee associated with curing the default.
September 1, 2026
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You can refinance an owner-occupied commercial property that is currently listed for sale, but the file has to carry a signed certification of occupancy and intent to occupy, the listing documentation itself, and an appraisal that addresses the listing and its impact on value and marketability. Underwriting confirms eligibility and may require the listing be withdrawn before closing. The real risk is inconsistency: where your representations, the listing and the appraisal do not line up, the file must be escalated and may be denied. This page explains why a listing is evidence about both value and intent, and how to document it cleanly and early.
August 31, 2026
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Light industrial is an eligible property type in our Small Balance Commercial program; heavy or dirty manufacturing is not, and it carries no minority-tenant carve-out. The line is drawn by a five-part definition in Appendix A: under 25,000 square feet, no heavy manufacturing or specialized industrial process, office space at 3% to 25% of total area, enough plumbing, lighting and fenestration for personnel, and no heavy machinery, welding operations, cranes or hazardous materials. The last clause disqualifies more buildings than any of the others.
August 31, 2026
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If the owner's expertise is critical to the existing business and involvement in a new venture would detract from it, the loan may be treated as a start-up - subject to different approval criteria, or declined. The logic is key-person concentration: on an owner-occupied loan the qualifying income comes from the existing business, and a new venture has no operating history to read. This page covers where the line between an expansion and a genuinely new venture sits, what the experience ladder does to an operator crossing industries, and what evidence - management depth, a bench, a management agreement - actually answers the provision.
August 31, 2026
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Buying from a family member, a business partner, your own landlord, or a related entity is treated very differently by our two programs. On the commercial side a non-arm's-length transaction is generally ineligible, and a disclosed exception at initial application is the only path. On the 1-4 unit DSCR side, a specific list of non-arm's-length structures is named as eligible, fenced by a gift-of-equity prohibition, the property flip provisions, and hard occupancy rules. This page sets both treatments side by side and explains what documentation makes one work.
August 31, 2026
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A building is multifamily on our Small Balance Commercial program when it has five or more residential units and every one of those units has a full and legal kitchen. The kitchen requirement was added effective 07/10/2026, in the same change log entry that removed the old 400 square foot per-unit minimum. So small units are no longer disqualified by size, but rooms sharing a kitchen are not units at all, however the rent roll describes them. This page explains both thresholds and where the line sits between a multifamily building and a rooming house.
August 31, 2026
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A mobile home park is an eligible property type in our Small Balance Commercial program, but only pad rent is underwritten. Park-owned homes are given no value and their rent is not counted, and RV space rent and outside storage income are excluded as well. An operator who has invested years into park-owned inventory will see an underwritten revenue base well below the one on their own P&L. This page shows what is excluded, why, and what the gap does to a valuation and a loan amount.
August 31, 2026
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A mixed-use building is Tier I or Tier II based on which side of the property produces the rent, not which side occupies the floor area. More than 50% of gross rental income from the residential units makes it Tier I; more than 50% from the commercial units makes it Tier II. Tier feeds maximum LTV, pricing, and the self-management radius, which means a single commercial lease renewal can move a building from one tier to the other without a brick changing.
August 31, 2026
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