Proper Commercial Loan Pricing Is Key To Lending Success
Commercial Loan Pricing
A lending institution’s lifeblood is its commercial loan business. Although consumer loans generate a hefty sum of business, commercial loans easily outdistance them in revenue and return on investment. So with that being the case it is important to have a commercial loan pricing scheme that will bring in business and not drive it away.
Commercial lending accounts for a significant percentage of many lending institutions’ gross business and according to The Institute For Local Self Reliance (ilsr.org/) up to 56% of those loans are to small business start-ups.
It goes without saying that commercial lending is big business. With new businesses starting up everyday there is a broad market for lending institutions to be approached from. Small, medium and large business start-ups are looking for affordable loans at reasonable interest rates so if your lending company can meet their budget you are in like Flint.
Though there is a prescribed financing range that a lender is allowed to operate in by federal and state regulations it is crucial to find the interest rate and loan structure that will appeal to the broadest number of potential clients and generate the optimum interest level to drive business to your lending company.
Overpriced loan packages and interest rates that are out of line with the current market flow will cause a lender to be an outsider standing by the side of the road watching loan traffic go right by them to other institutions that are plugged into the mainstream business market.
Consumer borrowing fluctuates just like any other area of business which makes it imperative for a lender to be aware of the most effective current loan characteristics that will attract the “hot” prospect to their institution and having the right software program that will assemble the most appealing loan model is key to that end result.
Contact us at The Hurdle Group to learn more about the services we can offer including our own commercial loan pricing model: PULPS.