16 Apr Private Lending Continues Push to Larger, More Complex Loans
Real Estate Business Online (http://rebusinessonline.com), a leading industry publication for the commercial real estate market, recently recognized Worth Avenue Capital, LLC for its success in providing a $3.5 million loan for a 16-acre retail development in Fairfield County, Connecticut. The recognition comes on the heels of loans of $1.0 million, $1.5 million, and $2.0 million made in the last 15 months throughout the Northeast.
That track record illustrates the changing tides currently underway in the commercial mortgage business: Banks, handcuffed by regulation and limited to only the largest loans due to increased consolidation, are no longer the go-to source for loans in excess of $1 million. Private lenders and alternative finance companies are coming into their own as market leaders for loans large and small.
Larger loans tend to involve a greater amount of underwriting than smaller commercial loans secured by a first or second mortgage on an existing property. There might be an increased number of tenant leases to consider, a greater number of entities to understand, and typically more complex operating businesses to evaluate. Historically, that’s why banks employed so many in their underwriting and monitoring departments. Now, however, that headcount is focused largely on complying with regulations. Underwriters no longer evaluate the prospects for a potential borrower, they evaluate how the loan in question will impact the bank’s regulatory compliance. SOMETHING IS BROKEN!
However, as banks retreat from the all but the largest and most secure transactions, private lenders have been able to fill the void. Since the institution of Dodd-Frank, private lenders have, with great success, attracted capital, expanded their product offerings, and sought out borrowers traditionally served by the banking sector.
Consider Private Lending
Despite the considerable growth in scale and complexity of lending capabilities described above, private lenders are not limited to one segment of the borrowing market. While closing on the three largest loans in its history, Worth Avenue Capital, LLC continued to finance projects from just under $1 million all the way to $50,000. Unburdened by Dodd-Frank and the corresponding overhead, private lenders are often eager to build their portfolios and expand relationships even for small balance loans.
Banks look to provide a suite of services their borrowers: cash management, deposits, investment management, etc. This forces them to evaluate a customer’s “profitability” across its product offerings, rather than focusing on the primary need of the borrower. Large borrowers are put-off by the need to consider changing banking relationships, and small customers are shut-out due to lack of scale. Private lenders, like Worth Avenue Capital, LLC, are focused on the single goal of quickly funding your business.
If you are a business owner seeking any amount of capital, Michael Ciaburri of Worth Avenue Capital, LLC would love to discuss the benefits of private lending with you. Worth Avenue Capital, LLC, a direct private lender, is eager to learn about your business and understand how it may help with your financing needs. Please, do not hesitate to contact us at worthavenuecapital@gmail.comor 203-605-4082. Our experts can understand your situation and work to provide a financing solution that can keep your business operating and growing.