commercial lending

“A man’s character is known by the kind of company he keeps.” – Proverbs 13:20

Fresh out of college, Jeff Luker, now COO of Commercial Capital BIDCO, worked in car sales for about eight years, running sales teams and finance departments. During that time, he gained insights he’d used later in his career in the world of commercial loan brokerage and lending. Citing the similarities between selling a car and closing a loan agreement, Luker says the biggest difference was learning patience, as loans can take up to 90 days to close, whereas a car sale is same day. Otherwise, the transition to Alternative Capital Solutions, Commercial Capital BIDCO’s affiliate company that was founded prior to the bridge lending firm, was natural and paved the way for Commercial Capital BIDCO to thrive as one of the most important departments in the two firms, second only to the rapidly expanding underwriting department. Luker has great pride in the company’s culture, one he says is unique and essential to its brand. Having been in his role for more than seven years, Luker says his team uses great continuity to perform on all cylinders, giving clients a consistently well-rounded experience.

Specializing in short-term real estate-backed bridge loans, Commercial Capital BIDCO finances deals ranging from $250,000 to $2 million but can go as high as $6 million. With a team 10 members strong, Luker is proud of Commercial Capital BIDCO’s strong cohesion, which aligns with the company’s ethos of doing whatever it takes to get the borrower the best outcome — even if that means sending them to a permanent lender.

As COO, Luker’s role is primarily to work with brokers who send loan requests in for clients, vetting those requests through underwriting and then contacting and closing the deal with approved clients. The rest of the team fills in each other’s shoes. Since they have worked together for years, teammates are able to pick up the slack to get every viable deal out the door. And with an increased focus on credit quality, the company is adding more underwriters to its team and Luker says there is no end in sight for the company’s expansion.

“Even though we’re a short-term bridge lender with an average closing time of about 17 days, and even with as quickly as we work, we still do a full doc underwrite on every deal,” Luker says. “We’ve had a lot of banks in our area tell us that our underwriting is just as good if not better than theirs. Of course, one reason for that is because when a banker underwrites a loan, they’re slanting it to what their chief credit officer wants to see. We can’t do it that way. Since we can help with the permanent loan as well, we position our package so that we can quickly turn it to a permanent package. And if we’re going to do that, then it’s going to have to have a wide audience.”

Having a permanent package option has proved to be essential for Commercial Capital BIDCO because, as the past few years have shown the world, the unexpected can and will happen. When solutions for borrowers dry up due to market fluctuations, Luker and his team aim to be in a position to find a permanent solution to their lending needs. While the company doesn’t have a minimum credit score for its loans, it does stray away from risky or speculative proposals and focuses heavily on the front end so the client knows what they are signing up for.

“Brokers call us frequently asking for our loan parameters, our minimum credit score and our minimum debt service,” Luker says. “We don’t really have any of that because each project is different and unique. We prefer to look at things on a case-by-case basis. We want to see what makes sense. Sometimes you’re getting your cash flows up and your debt service is not good, but if we can build in an interest reserve that makes sense to give you time to build it up, then the project does make sense. We don’t have any sort of hard and fast rules on our loans, and that speaks to our flexibility. We want to do loans that make sense and loans that have a clear-cut takeout.

“I think a lot of brokers and borrowers, when they come to us, a lot of times are gun shy. You never really trust a lender until you have a loan funded with them, and I understand that. But I think that once we get through the process and we’ve funded the loan, a lot of borrowers and brokers see that we’re really fast and we’re really very easy to work with.”

Looking into the current and immediate future for the state of the U.S. economy, property values will decline as rates rise. Commercial Capital BIDCO’s activities are all real estate backed, so being careful with valuations is a top concern for the team. When starting a new loan process, the team may run into a prospective client with an appraisal that is six or eight months old. Based on the company’s loan policy, the team may still accept that appraisal, but will go further to investigate, making sure it is a good fit before asking for an updated appraisal. This has always been a checkpoint in the loan process at Commercial Capital BIDCO and will continue to be as the economy ebbs and flows.

With a possible recession in the coming years, Luker believes it will be pertinent for his team to continue being flexible as well as sharpening their already effective strategies in regards to building the best funding packages for their clients. Rising interest rates will actually be a boom for the short-term bridge loan lender and Commercial Capital BIDCO is ready to take on the challenge of funding deals for an influx of borrowers looking for a lending solution.

ABOUT THE AUTHOR: Ian Koplin is an editor of DealMaker.