Despite the lack of federal oversight, independent lenders still need to perform for their investors in order to be successful, Business Loan Capital’s business EVP and director of commercial lending David Manser tells As we reported earlier this month, the firm has created an innovative multi-million-dollar fund structured exclusively for the pursuit of directlyfinancing owner-occupied commercial properties. The new fund is focused on the $500,000-to-$7-million loan sector. We spoke exclusively with Manser about the reason for the loan range and capital-markets trends he is noticing. Why is your firm’s new fund focusing on loans in the $500,000-to-$7-million sector?

Manser: We have lots of bank experience in the SBA area, and it’s all owner-occupied financing. With a lot of the problems that happened in commercial financing during the last downturn, referral sources would find deals and present themselves as lenders, but they’re really brokers selling on the secondary market and moving on—there’s no skin in the game. That’s a very active market today, where you can sell loans for a premium on the secondary market, but that’s not what we’re doing in the owner-occupied market we’re servicing.

We’re providing capital where we’re holding a piece. We’ll fund a $1-million transaction as SBA 504, and we’ll provide a $1-million first and fund either 100% of it or, to get more legs out of our fund, we’ll fund a percentage of it in a junior piece and find a participant to fund the majority piece. In return, we will get a little bit of interest-rate spread. It’s a little bit of benefit for us and a huge benefit for small businesses.

For us, we’re building out a balance sheet. Not a lot of non-bank lenders get to build a portfolio. But also, when we take a deal to a secondary lender, it means a lot to them if we’re going to fund a percentage of it first because we want to be in the game. To them, if we’re bringing it to them first and putting our own money into the game, knowing that how we get paid depends on the performance of the loan, that changes their attitude toward it. Combined with how we underwrite deals, they know that the deal makes sense. That creates more accessible capital in the market. We’re not just shining up a transaction to make it look good; we’re underwriting it, and we’re going to stand behind it side-by-side with the borrower and the bank that’s going to fund it. With this fund we are creating more access to capital for small businesses.