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Commercial Loan Pricing Trends to Keep an Eye On

Commercial Loan Pricing

Commercial loans have long been the largest asset earners for banking institutions, but since the economic crisis of 2008 the number of non-traditional commercial loan lenders has skyrocketed. Commercial loan pricing in recent times has gone from price-setting to price-taking with the increased amount of competition. Institutions that have an accurate image of their lending costs and their profitability will have a leg up on their competition in the modern market. The increase in commercial loan competition has been good for small business owners. Let’s take a look at some more trends.

Easier to Get a Small Business Loan

The Small Business Administration (SBA) has worked with large financial institutions and alternative lenders to guarantee a portion of the loans to small businesses. With SBA backing more lenders are willing to loan money to these business owners.

Rise In Alternative Lenders

The rise we have seen in non-traditional lenders directly stems from the economic crisis of 2008. Banks and credit unions were hesitant to lend to small businesses during these times since the economic climate was so uncertain. Others who saw more success getting loans from these institutions complained about the amount of “hoops that had to be jumped through” in order to secure their loans. With interest rates at an all time low since the crisis alternative lenders have seen an influx in customers.

Big Banks are Working With the Little Guys 

Recently, Wells-Fargo one of the largest banking institutions in the United States pledged to lend over 100 billion dollars to small businesses by 2018, and you can expect a number of other large institutions to follow suit. This trend has been attributed to the realization that small businesses are absolutely vital for local economies which in turn are vital for our national economy. It all starts from the bottom; successful small businesses are the driving force behind our economy.

Contact us for more information regarding commercial loan pricing.

by Alan Lee