Why Business Owners Are Turning to Alternative and Private Mortgages
In today’s mortgage market, traditional financing isn’t always designed for business owners. As entrepreneurs ourselves, we know the financial structures that come with running a business don’t always fit into a bank’s box. That’s where alternative and private mortgage solutions come in — not just as a fallback, but as smart, strategic options that save clients time, money, and unnecessary tax bills.
We recently sat down with mortgage expert Richard Earles, founder of Valley Financial, to dig into the real-life scenarios where private and alternative lending make a meaningful difference for self-employed clients. Here's what you need to know:
1. Deposit Loans: A Niche but Powerful Tool
Richard runs a unique deposit loan lending program for BC clients. Imagine your client has sold their home, but hasn’t yet received the funds — and now needs a deposit to secure their next purchase. If the sale is firm, Richard can lend up to $200,000 unsecured to help bridge that gap. It’s not for first-time buyers or every situation, but for the 2–3% of buyers facing deposit crunches, this can save a deal.
“It’s very niche — but if you’ve sold firm and don’t have liquidity for a new deposit, this gives you breathing room,” says Richard.
2. Using B Lenders to Avoid Unnecessary Tax
Many business owners underreport income for valid expense reasons — but that creates problems with traditional lenders who require high reported personal income to qualify. The solution? Alternative lenders, who accept lower reported income and allow add-backs for business owners.
Richard shared examples of clients who saved $30,000–$50,000 in tax by choosing a slightly higher interest rate (sometimes just 0.20% above the bank) with a B lender, rather than restructuring their income just to qualify.
“That small interest difference lets them avoid a massive tax hit. It’s a no-brainer,” he explains.
3. Private Mortgages: More Than a Bailout
Private lending isn’t just for people in trouble. It’s also for people in transition. Richard’s team sees it often with business owners who owe CRA or GST, or need fast capital to fund payroll or inventory. Instead of breaking a low-rate first mortgage, they layer in a short-term second — often through options like Home Trust’s Equity Line Visa, a semi-institutional second mortgage that’s reloadable and comes with competitive rates.
“Banks won’t pay out CRA arrears — it’s a hard no. But private and B lenders will. That’s a lifeline for some business owners.”
4. Old School Mortgage Brokering Still Wins
In an era where many mortgage brokers rely on cookie-cutter bank deals, Richard emphasizes the importance of deep structuring knowledge. Private and alternative lending requires creative thinking, fast problem solving, and confidence.
“Most of my referrals come from lawyers who see deals falling apart and send clients my way. They know I’ll get it done.”
His approach? Every time he works with a new lawyer on a deal, he calls them, builds rapport, and positions himself as their go-to for private and complex files — especially restructuring, foreclosures, or pre-sale financing.
5. Final Advice for Business Owners
If you own a home and run a business, you have more options than you think. Whether you need access to equity, help consolidating debt, or want to invest in your next move without blowing up your tax plan, the right broker can help structure a deal that works in your favor — not against you.
“Every file is different. It’s not about forcing your story into a square box — it’s about using the right tool for your situation.”
BOTTOM LINE
Whether you’re navigating a deposit crunch, tax planning as a business owner, or exploring private capital for a new investment, alternative solutions might be the most efficient path forward. And with the right broker, those options are more accessible than ever.
Level Up Mortgages is a mortgage broker team focused on helping the self employed, new immigrants, non-residents, and investors, access best rate and alternative lending in Canada. We have been nominated for best up and coming broker in Canada in 2021 and have been on CTV News and various publications because of our education-first approach to helping you always stay a step ahead of the process. Reach out to us for access to our first-time buyer course or a mortgage strategy session.
See What You Qualify For Or Contact Paul To Get Your Pre-Approval.
Paul Davidescu (www.levelupmortgages.com)
Level Up Mortgages
604-809-3188
paul(at)levelupmortgages.com
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