08/19/2010
Conventional Commercial Lending Shows More Activity, But What About Loan Demand?
Last month, we wrote about a CNN Money article that reported on weak loan demand near the end of June 2010. After the fact, analysts reported that commercial lending increased for the month.
According to a Business Insider article on banks beginning to lend again, Analysts reported that July continued the increasing trend of conventional commercial lending, extending the streak to two months in a row.
The latter portion of the CNN Money article reflected upon loan demand being weak, regardless of bank activity. This made sense as business owners continue to hold on to their cash reserves through the rough economic times. Taking out a loan is not as attractive as paying down current debt. Of course, this route takes a toll on some business spending, such as equipment renting, product development, sales, and marketing.
The Business Insider article makes a similar forecast about loan demand as of July 2010, extending the downward estimate for the remainder of the calendar year. Reduced consumer spending, which signals businesses to hold off on supply if the demand isn’t there, is one factor that is assumed to keep loan demand at a low level.
We’d like to observe how loosened bank loan regulation and the insertion of fresh capital from entities entering the commercial lending market, such as bond traders and other deep-pocket institutions wanting to capitalize on the commercial lending market, will affect the markets through the end of 2010.
As credit loosens up, the roles of conventional money come back into play. Down the food chain, hard money opportunities arise for customers who need the tool to make ends meet in order to qualify for conventional financing at a later point.
08/17/2010
New Forces Entering the Commercial Property Lending Market
If you’re feeling the squeeze caused by the current economic situation, you aren’t the only one. Other than our small-cap commercial mortgage segment of the market, other industries, such as bond trading and other securities, are feeling the effects of the slow recovery since 2007.
Nimble bond trading firms, like Cantor Fitzgerald, are making a move into commercial mortgage originations according to a blurb on the Wall Street Journal’s Plots & Ploys section.
While property prices start to stabilize, other firms outside of the commercial property lending segment are making their way into the market while traditional capital sources continue to hold credit close to the chest.
While this additional competition across all balance ranges may seem daunting, long-time competitors of small-cap commercial lending know that it takes more than a big wallet to provide funding to our various target markets.
There are relationships to be created and eyes to be attracted to such offerings. This doesn’t mean we can sit still. If a competitor can create a way to offer a more attractive pricing format while being able to offer extra values, and we do not move an inch to combat with better value offerings, we might start to see our trusted referral sources vanish right and left.
08/12/2010
Intention and Consequence
According to Forbes.com, Wells Fargo & Co. was ordered to pay nearly $203 million in overdraft fees back to customers and to change what was called “unfair and deceptive business practices” by U.S. District Judge William Alsup in the case Gutierrez v. Wells Fargo.
Wells Fargo’s currently processes checks from highest amounts to lowest, which in their policies, they intend to do so in the best interest of their customers. Imagine which payment you’d like to clear first—that cup of coffee or your mortgage? It makes sense at first glance.
However, this policy runs counter to unforeseen internal corporate emails and memos read by Judge Alsup that emphasize that the policies were to maximize the number of overdrafts. This intention is much different than looking out for customer interests.
While details of the case slowly aggregate on the internet, the case in point for today’s post is to shed light on intention. We are big on intention when it comes to the parties we involve ourselves with on a daily basis.
- Commercial Brokers: Our intention is to work with you to find a home for your deals, whether it is with us, or with another lender.
- Residential Brokers: We want to facilitate your deal so you can help your borrower confidently.
- Bankers: Preserving your client relationships while assisting in rehabilitating their business through our alternative financing is our goal.
- Borrowers: We implore you to get to know what we have to offer and know that if it is not a solution that fits your needs, we won’t push you to do anything. We’ll most likely show you someone else’s product that fits your situation.
The bottom line is that what smaller lenders can learn from this is that if you practice business with a firm, genuine intention, your customers will appreciate you for it. Saying one thing, but practicing it in a means that harms your customers is counter-intuitive toward building financial relationships that are quite sensitive in this current economic climate.
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