Using Stated Income Financing When Banks Say No

Commercial real estate projects frequently require more capital that investors have on hand, leaving them with the option of seeking additional funding. However, since that market crash of 2008, banks have started adopting very stringent lending practices. This can lead to a long string of rejections for commercial real estate investors when applying for bank loans. In order to sidestep this frustration, and get the funding they need for time-sensitive real estate opportunities, commercial real estate investors can utilize stated income financing.

The Useful Tool With a Bad Reputation

Over the years, traditional lending sources have tried to give stated income financing a bad reputation. Many people – from bankers to new CRE investors – believe that stated income means making up a number to claim as yearly revenue in order to get access to funding. It has been called a “liar’s loan” or “fibber’s financing,” and that name has stuck, mostly because people are not willing to do the research to find out exactly what stated income financing is.

The Truth About Stated Income Financing

Banks set high loan requirements in order to weed out “bad risks,” and to protect their own investments. Most loan applications require a healthy credit rating, and proof of steady income from an employer, or at least a regular paycheck (for business owners on their own payroll). This can be a problem for commercial real estate investors, because their revenue is generated from selling property, flipping houses, and rent from tenants – none of which come to the same amount on a regular basis, much even a weekly paycheck. Even if CRE investors make a lot of money every year, the fact that revenue comes from multiple sources, and not a regular paycheck disqualifies them from bank loans. The world of commercial finance recognized the inequity of treatment, and devised stated income financing as a solution. Unlike the myth, this type of financing needs to be supported by bank statements, as well as the most recent tax return in order to get access to funds.


Stated income financing can be used for a wide array of commercial real estate purposes. CRE investors use this type of funding for property acquisition, construction projects, and even refinancing existing properties to generate revenue. Stated income is a great alternative to traditional bank loans, and they can be structured to meet the requirements of commercial real estate investors and their goals. If you are meeting with obstacles and rejection notices from banks when seeking loans, try stated income financing instead.


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