Commercial Loans - Are Lenders Still Lending?
For the past six weeks since the CARES Act passed Congress, it has largely felt like the traditional commercial lending market has come to a screeching halt. Banks and even non-bank lenders converted all of their resources to making Payroll Protection Program loans, commonly known as “PPP” loans, and in a mad rush to access the funding before it ran out, it has felt like PPP is all anyone has talked about since the bill passed in late March. Now that most lenders have gotten their PPP clients funded, many people are asking “What is next? Are lenders still making commercial loans?” The answer is a most definite “Yes!”.
Despite the focus on PPP loans over the past six weeks or so, here at Commercial Lending X we have continued to see traditional loans get done. Not to boast, but CLX ourselves have closed eight commercial loans over the last six weeks and have gotten approvals on another eleven commercial loans over that same time period (and we are not counting any PPP loans in either group). The loans we have worked on have ranged from investment real estate acquisitions and refinances to business expansions, business acquisitions, owner-occupied real estate acquisitions, and debt refinances & consolidations. My point in sharing this information is to let everyone know that commercial lending is still happening, and deals are getting done.
We continue to have discussions with our large pool of over 300 lending partners every day. Although there are certainly some lenders that have pulled back and indicated to us they are not looking to do many if any new deals at the moment, and there are some lenders like some of our non-bank lenders that have had funding issues and are temporarily shut down, the vast majority of our lending partners are still actively lending and looking for new opportunities. Some lenders have even told us they are going to be aggressively lending through Covid-19 and that they see it as an opportunity to pick-up additional clients. In fact, many of our private money / hard money lenders are looking at this as an opportunity to grow their portfolios, and many of our SBA lenders are also gearing up to be aggressive.
Despite their desire to lend, all lenders must face the challenges that Covid-19 has created for their customers and potential customers, which has led to some new underwriting guidelines being imposed. The primary questions and items Banks are now requesting before approving or closing new financing is as follows:
SBA in the Spot-Light
As a rule, most business owners have always preferred to borrow money directly from commercial banks or other funding sources without going through the hassle of securing government assistance. When it comes to SBA financing many business owners think the process is long and arduous. Although the process can be slightly longer and certainly some additional paperwork is required, most of the SBA lenders we work with are approved underwriters for the SBA, meaning when they approve the loan it is already approved with the SBA, so the timeframe to get loans approved and closed is really not much different than it is with traditional bank loans anymore.
Most business owners only look to SBA financing when they are looking to start a business, buy a business, expand a business, or if they are in a higher risk industry (such as restaurants, hotels, entertainment, etc.). However, the SBA 7A and SBA 504 loan programs offer some great options for customers looking to refinance and consolidate debt as well. Some benefits of the SBA loan programs, that could help a borrower struggling from the impacts of Covid-19, are as follows:
Become a CLX Referral Partner
Do you have customers in need of commercial financing and you do not know how to help them? Here at CLX we offer several programs in which you can become a referral partner and earn commissions on opportunities you run across. You can be involved as little as providing us with a name and phone number. Or if you prefer, you can help manage the client through the entire lending process. We have many training tools and marketing materials available to use to help you grow your own client base. Please contact us directly at brad@commerciallendingx.com if you are interested in learning more about referring business to CLX.
Recently Approved Deals:
$1,800,000 Purchase Industrial Property: The Client was seeking to acquire a commercial / industrial property to move their trucking company into. We were able to secure financing with a traditional lender and an SBA 504 approval to facilitate 90% of the acquisition cost for the property.
$915,000 Purchase Commercial Property: The Client was seeking to acquire a commercial property to renovate and start their new business. We were able to secure an SBA 7A commercial mortgage loan to facilitate the acquisition, finance the necessary renovations, as well as fund initial working capital for the business despite current economic conditions.
