Alliant Capital and Centerline Capital are opening small loan divisions dedicated to the multifamily industry in hopes of filling what has become a glaring void in the debt market.

Borrowers looking for small loans these days have fewer and fewer options. Many previously active small loan lenders, such as Washington Mutual, Wachovia, Citibank, and KeyBank, have taken themselves off the market. While Greystone and Arbor are still active, the competitive landscape has certainly dwindled over the last year, especially regarding commercial banks.

“There aren’t a lot of places you can go right now to get a decent execution on a small loan,” says Jerry Anderson, an executive vice president and principal of Alliant’s new small loan division. “We’re offering something that really is a viable alternative to those entities that have now left the market.”

Alliant Steps In
Anderson came to Alliant in April and has since been busy assembling an 18-person staff, featuring six originators. The new small loan division will be headquartered in Anaheim, Calif., which is also Alliant’s first office in the Golden State. But that’s only an initial step towards what the company hopes will be a series of small-loan offices.

“We’re definitely going to open an office in San Francisco, and we’re looking for originators in Chicago,” Anderson says. “We’re also looking at Washington, D.C.”

Alliant’s new platform will process loans ranging from $500,000 to $5 million, and the company hopes to win borrowers over with reduced fees. Its application fee is $4,500, which Alliant will give back to the borrower when the loan closes. The company also won’t charge legal or appraisal fees, a strategy similar to Washington Mutual’s, “and no, that’s not a coincidence,” Anderson says.

Anderson, who ran Washington Mutual’s Fannie Mae small loan division up until last fall, also helped to start Fannie Mae’s small loan program during a five-year stint in Fannie’s multifamily division.

Centerline’s Entrance
Centerline’s Agency Lending Group will launch its Small Loan Solutions division at the Western CREF conference September 9. The company will offer loans ranging from $1 million to $5 million also through a Fannie Mae execution.

The division will be led by Managing Director Rick Warren, who joined Centerline two months ago after leading the small loan program at IndyMac Commercial Lending Corp. in Irvine, Calif., and previously establishing the small-loan program for Jacksonville, Fla.-based EverBank.

“Many of the other capital sources have dried up, and a lot of banks have been jumping in and out of the space,” Warren says. “There’s a void in the market, and we’re looking to help fill it.”

Warren has spent the last two months staffing up the division, which will be headquartered in Irvine, Calif. In all, nine people (including two originators) will form the early stages of the program in Irvine as well as another office in the state of Washington. Centerline will first target the major California markets, as well as Northwest markets such as Seattle, Spokane, Wash., and Portland, Ore., but also has plans to look east. “We are looking to open our next market in New York, once we get these two markets up and running,” Warren adds.

The staffers are all small loan specialists, and Centerline hopes to source much of its business from commercial mortgage brokers in its target markets. “We’re also putting local underwriters in the markets we’re targeting,” Warren says. “With small loans, knowing the market is extremely important, but there’s not as much readily available data for small loans. So, having an underwriter and an experienced originator on the ground in our targeted areas is, from an efficiency standpoint and delivery standpoint, a real advantage.”

Centerline will also charge a $4,500 application fee, and appraisal and legal fees are included in the application fee.