Correspondent Blog
Tag: Commercial Lending
Get Our Calculator – The Borrowers’ Dilemma of Waiting For Rates
The Fed just finished their July meeting and there are many banker that will be further waiting for rates to drop. By the same token, many borrowers are grappling with the decision of when to lock their permanent financing. Some borrowers are choosing short-term financing in anticipation of the Federal Reserve embarking on an interest…
The Power Of Three – Using Our Updated Loan Proposal Generator
Our article last week (HERE) discussed the “power of three” marketing rule and how to use it for loan proposals. The rule states that human brains make better decisions when given a small selection of appropriate options but not too many to become confused. One or two options are usually insufficient, and five or more…
Use This Loan Proposal Tactic To Boost Conversions
We review hundreds of term sheets and proposals for commercial borrowers each month. One successful loan proposal tactic for community banks to improve their acceptance rate is to embrace the old marketing rule of the “power of three.” We often see banks proposing one or two options for a commercial borrower, and often, the options…
The Term Structure of Rates and Its Impact on Commercial Borrowing
Bankers need to consider the term structure of rates, also known as the yield curve shape, when structuring and pricing commercial loans to maximize return and reduce risk. Many bankers and borrowers are convinced that a recession is imminent, but the current term structure of rates does not necessarily establish this conclusion. The yield curve’s…
How To Talk To Commercial Borrowers About The Future Path of Interest Rates
The Federal Reserve Open Market Committee (FOMC) has raised short-term interest rates by 3.00% in the six months between March and September. The market is now forecasting an additional 1.25% in hikes by year’s end, with the next move coming on November 3rd. Many borrowers and market participants have been surprised by the speed of…
The Cost of a Commercial Real Estate Loan
Most financial institutions never see the actual cost of originating their products. To do so would require at least a rudimentary funds transfer pricing methodology, and many banks have not invested the time to derive a workable framework. Understanding a product’s cost structure is the first step towards accurate pricing and, more importantly, process improvement….