Small Is Beautiful

Small Is Beautiful

Generally speaking we are quite willing to consider small loans. We realize that we will never get rich doing small loans, but we also remember what got us where we are. The large loans can be quite fickle, coming and going as they please, but the small loans seem to be there when we all need them the most. The large loans help us buy that new flat screen TV; the small loans put food on the table.

So this week I thought I’d profile a small loan that we just closed. We had a woman come to us looking to borrow money against a free and clear small commercial condo in Gresham, Oregon. It is a tiny space being leased to a local barber. There were some potential negatives: (1) the borrower didn’t know what the value of her property would be and didn’t have an appraisal, (2) she was looking to pull cash out to use for personal purposes, and (3) the residential side of the condo had not completely sold after construction of the building and so were being utilized as rentals. Overall though, we liked this loan. The borrowers were basically solid, the property was basically new and attractive, and the tenant had a good track record.

We felt it unreasonable to require a commercial appraisal in order to make a $60,000 loan—so we looked at all the available info: original purchase price, income, and one or two local comps, and were able to settle on a basic opinion of value.

We made the loan: 65% LTV, 13.5%, 3 years, and with no pre-payment penalty or minimum interest—so the borrower will be able to repay as soon as a conventional option becomes available to her without taking an additional hit.

Bring us your small loans. We'll give them a fair chance.


Clay Sparkman
Vice President
Fairfield Financial Services, Inc