52 Scotsman Guide Commercial Edition |
ScotsmanGuide.com | March 2018 March 2018
Gary Bechtel is president of Money360, where he is responsible for developing
and executing the company’s expansion strategy. A direct lender, Money360 offers
borrowers speed, convenience and reasonable terms, while offering investors direct
access to attractive fixed-income investments secured with a first-priority lien against
income-producing commercial real estate. Investors range from institutional investors to
high net worth, accredited individual investors seeking better risk-adjusted returns than those offered by
traditional fixed-income investment vehicles. For more information, visit money360.com.
Reach Bechtel at email@example.com.
<< Rethink continued from Page 50
To make matters worse for banks, financial regulations such as the
Dodd-Frank Act and Basel III imposed strict capital requirements on banks
in an attempt to prevent another crisis. These requirements had the added effect
of making it less profitable for banks to engage in lending, since they had to hold a
certain percentage of assets on their balance sheets to cover liabilities. Naturally, banks
responded by severely scaling back their lending activities and focusing only on the
largest and most creditworthy borrowers.
The rise of alternatives
So, how did smaller and less creditworthy borrowers obtain capital? The answer was
alternative and nonbank lenders, which stepped in to help fill the void left by banks.
As the economy recovered and interest rates remained low, alternative and nonbank
lenders further solidified their positions.
Alternative small-business lenders had a 4. 3 percent share of the U.S. small-business
lending market in 2015, a share that is expected to rise to 20. 7 percent by 2020,
according to Business Insider. The Mortgage Bankers Association reported alternative
lenders had a 68 percent year-over-year increase in commercial and multifamily loans
in 2015. That was nearly double the 35 percent increase for commercial banks.
While banks still represent the majority of lending volumes, it’s clear that alternative
lenders are increasingly becoming a go-to source of capital for small and medium-sized
businesses, as well as individual consumers. The lenders that are best positioned to
continue accumulating market share are likely to be the ones that can best combine
the benefits of technology with a dedicated customer experience.
The next chapter in the story of commercial real estate lending is unclear,
but alternative and nonbank lenders are likely to continue to play a
major role. Recent lending volumes point to a future where both
borrowers and mortgage brokers will have a wide range
of options for their capital needs. Commercial mortgage brokers should take the time to learn about
the different types of alternative lenders and
educate their clients about why an alternative
lender may make sense for them. n