It’s important to spend a few minutes to talk about the use of “Stated Income” Commercial Loans. There is so much misinformation regarding this type of mortgage program that it just needs to be cleared up once and for all.
First, what is it? “Stated Income” is a loan program that allows a borrower to simply say the amount of income they make and use that income as the basis for qualifying for the loan they seek… no tax returns, no financial statements… simple, right? The interest rates are somewhat higher than fully documented loans but this is to compensate the lenders for the increased risk factor. They make up for it with lots of flexibility and easy qualifying.
Although they have been around for years in the home buying residential markets, up until about 5 years ago stated commercial loans were unheard of. If the small commercial business owner wanted to expand their business, buy an investment property, payoff back taxes, consolidate debt or just take cash out of their equity and weren’t able to show the business and personal financials that were required, they were out of luck. The banks wouldn’t consider it. They were left out in the cold… persona non grata.
The stigma that was attached to “Stated Income” programs was that it was for deadbeat borrowers who couldn’t show tax return and therefore had something to hide. I’m here to tell you this just isn’t true.
There are cash businesses that don’t have receipts for the sales they do and rightfully don’t declare a large portion of their income on their tax returns. In addition, being in business allows for operational expense right-offs that wash out the income on their tax returns in order to retain a greater portion of their income. This doesn’t mean they aren’t profitable, it just means they aren’t showing it.
In the early days I knew an “old time” restaurant owner who had a saying, “at the end of the night we count up the money, throw it into the air and whatever sticks to the ceiling we give to the government.” This is because of the tremendous cost associated with operating this (or any) kind of small business. The system is set up that way and if you want to survive, you better take advantage of it.
“Stated Income” loans are not for deadbeats. They are for legitimate business owners and investors who reinvest the earnings in order to grow their income and try to improve their life and provide for their family. It is a noble undertaking and there’s nothing easy about it. Everyone has their hand in their pocket. Stated Income loan programs are the original fair deal for the small business owner and gives them the opportunity finance their future.
It’s not easy to be forced to try and borrow money from family members when the banks turn you down. I know, I’ve tried… I’d rather walk over burning coal. Hyland Financial provides “Stated Income” mortgage loans at great rates. If you know anyone that needs one be sure to let them know. They’ll thank you for it.
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