SBA and Commercial Finance and Investment News

Ever wondered why start-ups are just so tough to do anything with — in a day when banks are trying to push 5 year money out the door at under 5% and 3 year deals are at 1.75, and there are no takers?  Wonder if the Fed is pushing on a string trying to get small business on track?  Of course we all know that the fail rate on startups is ridiculous and NAICS data from SBA gives us tons of ammunition to say “no” because we can document the 10 year failure rate for eaxch business category by looking at SBA’s default rates for thousands of loans.  Don’t believe me?  Click here SBA-DEFAULT-DATA by NAICS.  You’ll like that spreadsheet if you have not seen it before, or even if you have…

No, the REAL culprit is the examiners, as we all equally know.  Or is it?  No, says Denver bank consultant Larry Martin.  Consider his citation from a recent RMA Journal article.  It’s a great story.  Sort of hits home.  Here goes:

“When we entered the room, Mr. Clark stood at one end of the table. In front of him was a large stack of currency. We took our seats around the table, alternating our stares at Mr. Clark, the money, and each other. It seemed like an eternity before Mr. Clark spoke. He began, “Gentlemen, this is the BANK’s money. It is not YOUR money. As you begin your lending careers, you will be asked by many potential borrowers to loan them the BANK’s money, and after careful analysis of all the necessary facts you may decide to do so. In certain instances, your good sense and analytical skills may tell you that the risk of loaning the BANK’s money is too great for the reward, but your heart tells you that the potential borrower deserves the opportunity to see his dream come to fruition should he receive the needed capital. At that instant, reach into your back pocket, remove your wallet, and loan him your money. But do not loan him the BANK’s money.”

I have thought of this speech almost daily for the past four decades. If we required lenders, as part of their 401(k) plans, to buy a participation in each credit decision they made (and also be happy with the rate of return on the risk incurred), I have a feeling that our losses would be significantly lower because we would have done better analytics, the bank would be properly margined, and, most importantly, each credit would be managed frequently. Also, any problems that cropped up would be addressed immediately…”

Hmm, food for thought.  Vintage 1969.

PS WE (Credit Unions) are, in fact, making commercial real estate loans, and financing rental 1-4 unit prioperties.  I lend here in Colorado and in Wyomuing and Nebraska.  Click here for rates and programs. Commercial Mortgages March 2012- Centennial Lending  We are mid 4′s on 5 year money and low 5′s for 10 years, low fees, no prepay penalties.

Ah yes AND, FYI, if you want a creative lender, or a great advisor, to refer your clients to here in Colorado, a guy who holds the hands of those startups soup to nuts and patiently helps them find financing if at all possible, let me recommend Marcus Weathersby at this web address:  www.coloradobla.com.

Have a great week!

Here at Centennial Lending , where we do smaller balance loans on all kinds of investor real estate from 1 unit to 100, 500 square feet to 50,000, our credit union commercial rates have hit an all time low. We  have reduced our base 5 year rate to 4.5% and our base 10 year rate to 5% flat for good quality real estate with good liquidity and credit – recent transactions include small office buildings, a 15 unit apartment complex, new construction , and a freestanding retail store.  The reduction of our rates has been dramatic.

And I understand on the life company side, spreads have narrowed to 250-300 over Treasury, which puts 10 year money at 5% for commercial.  And spreads are tighter for multifamily.  Typical agency multifamily is 75-80% LTV for a purchase or no cash out.  Commercial money at life companies is 60-70% LTV typically with 130 or better dscr.

The BANKS in our fair city of Denver are tripping over themselves here to make owner occupied commercial RE loans – I hear rumblings of rates at 4% for 5 year money and one bank bid 1.75% last week on an owner user flex building.  Insanity.

Ladies and gentlemen, these rates will NOT last! The 10 year T is on the way UP as the Greeks pretend to comply with ECB mandates and our unemployment picture improves.  NOW would be a REALLY good time to get started on that refinance or new build, or buy that building.  Take the money and run and if you need some direction email me at tim.thomas@centennial-lending.com or call 303-746-9169.

Here is what my Colleague Lou Barnes, WSJ contributor, mortgage banker and columnist, not to mention Boulderite, had to say: today:

“Gradually improving US economic data and a Greek deal of some sort have relieved immediate financial fears, and so bond and mortgage rates have risen.

The rate increase is proportional to the relief. 10-year T-notes have moved from 1.92% to 2.02%, and mortgages from just under 4.00% to just under 4.125%, roughly like your kid’s fever dropping from 105 to 104.5.

The most reassuring news here is the up-trend in the small business survey by the NFIB. Although its overall optimism is little better than the bottom of recessions going back 25 years, it has been improving each month since August, and only two months since 2007 have had better readings. The weakest internal component has been sales, now the worry fading fastest.

Another legitimate breakthrough: weekly claims for unemployment insurance have dropped again, to 348,000 last week. Wobbling near 350,000 in the last couple of months has been a straight-line decline from the 400,000+ range of the last two years, and is only about 25,000 weekly above what anyone would consider normal. However, everything about this cycle is so abnormal that nobody knows if normalized layoffs will translate in to normal hiring. “

Bottom line — we may have PASSED the low.  Time to get ON THE TRAIN!

Good morning!  Do you want to get the very latest techno-boost  to power your way to more sales in 2012? Want to learn to Really use the Cloud and all the fabulous applications now available?  I am sponsoring a seminar at the Denver Metropolitan Association of Realtors office, 4300 E Warren Ave, Denver, on Thursday February 23 at 7:30 AM until 10 AM.  Admission is free if you are in CCIM (Colorado-Wyoming) and if you mention you are my guest it’s complimentary for you non-members as well!  We have a gifted, tech-savvy presenter in Brian McDonald, CCIM chapter president.  It promises to be a wonderful session.  Click here for a hard copy of the invitation  Tech Tools for Real Estate Professionalsand call me 303-746-9169 for more information or email tim.thomas@centennial-lending.com.  For the latest credit union commercial and investor property  rates and programs, click here. Centennial Lending Commercial Mortgage Programs