Investing in America: 7 Strategies and 7 Tactics That Can Drive Business

The Biden Administration “Investing in America” agenda continues with many programs opening in June of this year. If your bank has not done so already, it should consider getting involved for the benefit of customers and shareholders. The various programs are wide ranging, complicated, and impactful which is why now is an excellent inflection point…

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6 Concepts Borrowers Must Understand About The Lending Curve

Most borrowers have a rudimentary understanding of interest rates, the yield curve, forward rates, and forward premiums.  Commercial bankers are trusted advisors and have a unique opportunity to understand their client’s specific financial and personal situations, explain the basic concepts of capital markets, and offer prudent and objective advice to help customers reach their goals. …

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The Secrets of Good Loan Commitment Letters

Good commercial lenders use commitment letters and proposal letters to their advantage.  A proposal letter (or letter of intent) expresses interest from the lender before credit approval is obtained.  A commitment letter evidences the lender’s commitment to lend.  It is only furnished after preliminary credit approval and typically contains the following language: lender commits to…

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Planning For The Future Path of Short-Term Interest Rates

The FOMC lowered the Federal Funds target range to 0.00%-to-0.25% in March of 2020, and it has remained there since.  But now, the market is convinced that the FOMC will raise rates in 2022 through 2024 to better align short-term interest rates with expected market conditions.  This pivot by the FOMC has bankers, and customers,…

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Understanding The Capital Structure – Better Real Estate Loan Advisory

The capital structure of a business refers to the mix of debt and equity used to finance the company’s assets and operations. The simplest forms of financing for a business are equity and debt, although there are many hybrids. Equity represents the most expensive form of financing.  Because debt is legally first to be paid,…

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Helping Borrowers Quantify Volatility Risk

In a recent article (Here), we discussed how lenders might help borrowers decide if and when to refinance debt and why lenders, as trusted advisors, should have a borrower’s best interests as their primary objective.  We also addressed how lenders should compare a borrower’s refinancing costs now versus waiting, and we shared an Excel model…

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Use Our 10-Layer Pyramid to Educate and Advise Borrowers

Most customers are borrowing neophytes.  We estimate that the majority of community bank borrowers have a rudimentary financial and accounting understanding, and these borrowers may focus solely on the interest rate on a loan when comparing their options.  Even “sophisticated” and seasoned borrowers do not know how to compare their borrowing options to optimize outcomes. …

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