Understanding the Complexities and Nuances of Commercial Lending


As real estate investments surge, the demand for more funding options also grows — and private commercial Investors who offer loans that may be unavailable through traditional banks are stepping up to fill the gap.

However, a complex licensing landscape is hampering their ability to expand services across state lines.

Obtaining a commercial real estate lending license in a single state might seem straightforward, but the process is becoming increasingly complex.

Licensing requirements and laws vary significantly between states, leaving private lenders needing more research and preparation to expand their reach. All this can be time-consuming and tedious, even for the most established private commercial lender.

Further complicating matters, at least 18 states have restrictions on commercial real estate loans. The most restrictive and popular states requiring licensed lenders to provide business-purpose funding are South Dakota, Arizona, Nevada, California, Vermont, Utah, and North Dakota.

Every state has unique lender licensing requirements varying in complexity, confusing lenders with their application process and navigating the prerequisites for each.

Eligibility Requirements in Every State

Most states have specific eligibility requirements. In California, a private commercial lender must have a minimum net worth of $25,000. In Arizona, it’s $100,000.

Additionally, Nevada and Arizona require lenders to have a brick-and-mortar office and a qualified individual living in the state. All states require a surety bond (the minimum varies).

Application process

All applications for state licenses (including other required forms and documentation for licensing) must be filed via the Nationwide Mortgage Licensing System and Registry (NMLS). Unfortunately, many commercial real estate loan lenders find this web-based platform complex and unuser-friendly.

Maintaining their NMLS licenses also adds a significant burden for many lenders, who find the process extremely stressful and time-consuming. Applying for a license requires at least two separate applications with the NMLS:

  1. MU1 (the lending company’s application)
  2. MU2s (individual application for every controlling person in the company)

A private commercial lender may also need a branch application for every additional office location. Ultimately, all records and applications must be linked in the NMLS.

In addition, bond companies must link their bond to a company account in states requiring electronic surety bonds. When uploading documents in the NMLS, lenders must use specific file names (which vary by state) and upload them under different locations.

Financial Statements & Other Essential Documentation

Most states want to see the financial statements of companies offering commercial real estate loans, but the specific requirements for these statements vary by state.

For instance, California wants lenders to submit an unaudited financial statement prepared according to GAAP, while Arizona requires the latest CPA-audited statement.

Meanwhile, Minnesota doesn’t need a private commercial lender to upload a financial statement.

Business Plans

Most states want a formal business plan showing the lender’s marketing strategies and products. Some states may also require additional documents.

For instance, Nevada and California require specific formats and ask for further information beyond what a typical business plan covers.

Organizational Management & Structure Charts

To add to the complexity, private commercial lenders must submit charts detailing their organizational structure and management team. They need to submit organizational structure charts that map out who owns the company and show the percentage of ownership held by both direct and indirect owners.

Some states take this a step further, requiring disclosure of individuals holding specific percentage voting shares within the company.

Many states also want to see management charts, which focus on the people who run the company’s day-to-day operations — specifically those who directly manage commercial real estate loans.

These charts must show all directors, officers, managers, and other individuals with authority or control over the private commercial lender’s commercial real estate loans and lending activities.

On top of all this, many states require a private commercial lender to submit to criminal or FBI background checks, credit checks, and fingerprint processing.

Nuances & Complications

Gathering and preparing the state-specific documents and information itself is a time-consuming task. However, companies offering commercial real estate loans must also hurdle additional obstacles:

  • Acquiring foreign state registrations
  • Securing MLO sponsorship approval
  • Obtaining an appropriate bond
  • Completing MU2s

The wait doesn’t end after applying. States still struggling with backlogs caused by COVID-19 lockdowns may take over six weeks to review the documents. Plus, state regulators could require several rounds of follow-up.

Simplify commercial lending with Private Capital Investors.

If you’re looking to apply for commercial real estate loans, take the time to check whether the private commercial lender you want to work with is licensed in your state.

Private capital investors are trusted private commercial lenders for properties valued from $2 million to $50 million. With our help, you can expect to be approved for commercial real estate loans within 24 to 48 hours. Here are some of the commercial loan products we offer:

  • Commercial real estate funding – Do you need a bridge loan or hard money for your commercial real estate? We can provide the funds within two weeks.
  • Commercial bridge funding – Our bridge financing offers the liquidity you need when you don’t have the resources or time to go through a traditional lending process.
  • Hard money loan – As direct hard money lenders in Miami, we can finance your upcoming commercial real estate endeavor quickly and flexibly.
  • Stated income loan – This type of loan is designed for investors who might find it challenging to qualify for traditional loans. Our solution lets you get commercial real estate loans with minimal documentation.

Why choose us?

At Private Capital Investors, we offer direct private CRE loans quickly and easily from various programs. As your lender, we take the guesswork out of finding the most suitable funding while ensuring the best rates and conditions.

We are based in Dallas, but our CRE loan programs are available beyond our city. We serve clients nationwide, including commercial property projects in Houston, Miami, Massachusetts, and Arizona.

Our team can also accommodate international deals. Being a private commercial lender, we offer the following perks to our clients:

  • At least 5.99% on our rates
  • Approval in 24 to 48 hours
  • Funding available in at least 14 days
  • Excellent customer service
  • Stated incomes without requiring financials
  • Common sense underwriting

Learn more about our commercial real estate loans by calling 972-865-6206 or emailing info@privatecapitalinvestors.com. You can also apply now directly by filling in the inquiry form.

Want to learn more? Get in touch with us today.

Similar Blog

A Comprehensive Guide to Buying Land for Your Hobby Farm

A Comprehensive Guide to Buying Land for Your Hobby Farm

Hobby farming has become very popular over the past decade, perhaps because more people want a simpler lifestyle—one that's connected to nature. If you're dreaming of owning a small piece of land for recreational farming, it's essential to understand what this entails...

What to Expect on the Closing of Your Farm Land Loan

What to Expect on the Closing of Your Farm Land Loan

Statistics reveal that there are over 11,000 farms in 39 states. Most of these businesses depend on farmland loans to keep running. Whether you want to buy land for farming or looking to improve on an existing agribusiness, an agricultural loan can support your...

Want to learn more? Get in touch with us today.

Our experienced team is ready to assist with your financing needs.

2101 Cedar Springs Road Suite 1050 Dallas, TX 75201