Why It’s Difficult To Get Commercial Loans

It’s difficult to get commercial loans because…

  1. Banks a being scrutinized by the FDIC and regulators.
  2. Approving officers at the banks are worried about industry trends.
  3. Approving officers have had bad experiences with certain industries and loan types.
  4. Government guarantees have not always performed as the banks expected.
  5. Secondary market investors are more conservative.
  6. Borrowers are not often prepared for contingency risk but are willing to gamble it all for an opportunity.
  7. Economic uncertainty.
  8. Banks have lost money to many borrowers they felt were a good risk before the economic crisis.
  9. Commercial underwriting is subjective.
  10. Appraisers are not confidently valuing properties in the current climate.
  11. Property values are very volatile for real estate and used equipment.
  12. The market in general is bought and sold at significant discounts as people cut their losses and liquidate assets.
  13. Rates are low which create tighter operating margins for some lenders/brokers.
  14. There are fewer loan programs available at this time.
  15. Borrowers are not as liquid as they once were.
  16. Personal credit is not clean for most borrowers.


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