How to Secure Financing in a Tough Market

We’ve all seen the signs—tightening credit conditions, stricter underwriting, and mounting pressure on commercial real estate (CRE). But what’s brewing now is more than just a minor storm. We’re heading into a full-blown recession, and the financial sector is feeling the squeeze. Here’s the bottom line: banks are piling more loans onto the already massive “wall of maturities.” That’s bad news for borrowers and sellers alike. The market is stagnant, with buyers and sellers at odds over property values, and sale transactions are crawling to a near halt.

If you’re a borrower hoping that rates will drop and banks will suddenly start handing out long-term renewals, it’s time for a reality check . Banks don’t have excess liquidity, and they’re not in a hurry to give it out. Worse yet, they’re being told to lower their exposure to CRE loans. So, even if rates dip slightly, it doesn’t matter. If your bank lacks the liquidity or the confidence that your cash flow can survive the coming downturn,?then?getting an extension is unlikely.

Here’s the kicker: most borrowers don’t have the cash reserves to bring down their principal balances. That means when your bank finally stops granting short-term extensions, you’ll be looking for a new lender . And let me tell you, finding one that’s ready to step in isn’t going to be easy.

Now for a glimmer of hope: life companies are still lending . They’ve got better rates, plenty of liquidity, and none of the relationship requirements that banks are throwing around, like keeping a 10-30% deposit. However, accessing life companies isn’t as simple as calling them up directly. Life companies don’t have the staff to source loans straight from borrowers. Instead, you need to go through their correspondents—specialized intermediaries who handle loan requests. There are only a few correspondents in each market, making them a critical resource for any borrower looking to secure financing from a life company.

If you need smaller, fixed-rate bridge loans under $10 million, life companies have you covered there, too. They’re not impossible to find, but they require knowing the right people and having the right connections.

The writing is on the wall. The market’s tightening and the easy deals are behind us. But with the right lender and strategy, you can still come out ahead.

Need advice on your next move or help securing a loan? Reach out . I’m here to offer the guidance you need to make informed decisions in this challenging market.

Schedule a 15-minute complimentary consultation: https://calendly.com/michaelbalan/