What's New or Noteworthy:
As of November 25, 2011
The hottest area in our lending environment right now, is "note discounting" loans. If you weren't specifically aware of it, banks have been attempting to get marginal loans off of their books for a year or two now. These aren't necessarily the non-performing loans; often, these are just loans that represent a higher degree of risk in the bank portfolio -- in a banking environment that is becoming increasingly conservative. For instance, one client (with a dozens and dozens of decades-long fully performing loans) received a call from his bank, requesting the call of several loans, simply because they decided that they no longer like movie theaters. (See our section on Entertainment Loans.)
What you are likely aware of on some level, is that banks have gotten increasingly restrictive over the past several years. There are compound issues here; but one of the most significant is that almost every bank is now under increased scrutiny by Federal Regulators who are scouring their books for potential bank weaknesses. As a function, banks everywhere are being asked (read, told) to get certain loans off their books, or alternately to put more cash in reserve as a contingency -- or they risk being taken over by the Feds! So, in a move that was not of their making, these banks, at the risk of losing their charters, are turning to their customers to get certain loans off of their books, and to improve their internal books.
As an aside, this, by the way, is precisely the reason why the banks have tightened up on their loan approvals; frequently taking applications, only to later turn them down in approval committee. This by itself, poses a grave threat to our economy, and is the central reason why we have the passion here to do this work -- to enable those businesses to continue to get the operating capital that is so essential to them. The lenders in our portfolio are actively lending; and one of the great frustrations to me is that clients who have been turned down by their local banks presume that there is no lender who will finance them. And then bail out of the process before it begins. Nothing could be further from the truth in our world. And in fact, because of this reality, our business is booming. And returning a very needed service to those economic-essential businsses.
OK, so off of the passionate soapbox now. Returning to the issue, because of this reality, the banks are increasingly moving to get loans off of their books, rather than to take on new ones; and if you comprehend what I've written above, the need to them is greater than they are conveying to you.
Which brings us to our topic: Right now, we are beginning to find that, because of this urgency, these banks are taking 70%, 60%, 50% and less of the remaining note balance, just to be able to discharge this loan from their books -- provided that you cash out quickly. This part of the negotiation is not something that we can do for you; but we are happy to assist you in how to address this possibility. Contact us.
But to the point, one of the hottest areas of our environment right now is a group of our lenders who are quickly coming in with up to 100% loans of this discounted amount -- enabling the banks to get the loans off of their books; and for you to take advantage of a very real benefit. To give you an idea of the scope of this, we can share with you from our conversations with them, that there are literally billions of dollars waiting to be deployed in this area right now. Contact us for the details.
Although this is not new to some, here in our New and Noteworthy section, it is entirely noteworthy: In our economic situation, lending rates have been coming down for quite a period of time now. This is largely a function of our challenging economic times, both here and abroad -- and the resulting governmental and Federal Reserve moves. (Follow the periodic posts at our "Rates" blog if you have interest to follow this area of understanding.)
At any rate (no pun intended), the significant reality is that most any business that has even a previous wonderfully performing loan, likely has an opportunity to refinance this loan at a much lower rate, with enhanced terms (longer terms, no balloons, changing a recourse to a non-recourse loan, etc.) This translates to not only cash flow for you and your business, but long term stability as well, as bank loans frequently have a balloon period -- one that is likely coming up due in a short number of years.
We don't know how long this particular economic condition will last where our rates will be artificially "bought down". This may be a couple of years, as the Fed is stating; or conditions may change quickly that will cause financing interest rates to skyrocket. If you can refinance in this situation, and stabilize your long term picture with a fully-amortizing loan (that is cheaper, saving you money in the monthly-meantime), why not do this?!
Call us today to discuss what we can do for you.