March 9, 2010
On the Front Lines
As we make our way out of the wake of the recession, many financial marketers are pushing solutions of recovery. One in particular is JP Morgan’s big promise that they will dedicate $10 billion to small business loans:
(source: The Baseline Scenario)
According to The Baseline Scenario’s article, ‘The PR War,’ JP Morgan’s definition of “small business” can change by the quarter. Are these small businesses the same ones with risk factors that usually turn off the bigger banks?
Check out the article to see correlations between the ads claim and their actual quarterly data.
This is some bold marketing talk. Usually it’s the community banks and private money entities that fight for small businesses on the front lines. We are usually picking up those who have fallen off the conventional financing wagon.
How will big promises like these shake up our scenarios within 2010?
March 4, 2010
Bright But Foggy Road
We may hear about delinquencies slowing and loan prices rising, but how does that really change industry professionals’ forecast of 2010?
Articles like Housing Wire’s “Commercial Mortgages Showing Signs of a Brighter Road Ahead” inspire industry members to think positively for the upcoming year. Pieces like these that push innovation within finance, how lenders can provide their services, and how they can revolutionize the way these businesses come to market.
The piece states that loan values and investments are growing, despite the risk that many smaller businesses (who cannot afford to lose) have inherently. While the trends may look one way to analysts, what does it look like to the smaller private money firms? To brokers?
Sound off on your perspective.
March 2, 2010
Opportunities Are Dynamic
They don’t remain around for too long. They constantly move. People who do not act end up missing out on great returns, whether emotional, educational, fiscal, or whatever your value may be.
Consider The Huffington Post’s latest article on lawmakers probing bank lending practices involving smaller businesses and commercial real estate. The author, Marcy Gordon, states, “U.S. bank lending last year posted the steepest drop since World War II.”
The article touches upon the fact that the FDIC gives banks “considerable flexibility” involving decisions to extend loans. If this is so, are the banks really exercising this leeway?
The article suggests, in agreement with popular economic opinion, that small businesses are a lynchpin for recovery since they are a source of a majority of jobs. It is because of the banks’ lowered risk appetite, however, that many small businesses cannot receive the credit that they need to operate. This sounds contrary to economic recovery. It is no surprise that regulators are scrutinizing practices even further.
As lawmakers continue to probe and prod banks, does this threaten the window of opporunity that private money has to be a solution and hero to “troubled” borrowers?