Commercial Loan Analysis

Small Community Banks and Credit Unions can sometimes struggle originating commercial real estate loans or performing the required annual financial reviews on the commercial loans they originated in the past.  

The struggle, in many cases, comes down to having a competent team member to perform the duties required of the role. Experienced Commercial Loan Officers can command salaries at levels prohibitive for small banks and credit unions, so they opt for younger inexperienced team members brought on at lower salaries and given training. Unfortunately, a high percentage of these hires gain experience and move on, a natural occurrence, and one with repercussions.

When a Commercial Loan Officer leaves it can stifle or stop new commercial loan originations. A void in these originations can be overcome by shifting to other loan products but not having a Commercial Loan Officer on staff to perform the required annual reviews and monitor the performance of these loans can become a regulatory issue. For these reasons many smaller institutions choose to avoid the commercial arena, simply, the downsides outweigh the upsides.

SBorgerson Consulting offers a solution that delivers the best of both worlds, you bring on a highly skilled and proven Commercial Loan Officer, at a rate equal to a fraction of the cost of an FTE. We can perform your initial loan analyses and loan write-ups as well as complete your annual financial reviews. 

Our initial loan write-up and our annual financial reviews use the same seasoned and accepted format. Our loan write-ups include a three-part cash flow analysis: a primary, secondary, and tertiary analysis consisting of a subject property cash flow analysis, a global cash flow analysis, and a liquidation analysis. SBorgerson Consulting is available on an as needed basis to meet all your commercial loan needs.

The Commercial Real Estate loan market is a prime target for smaller banks and credit unions for multiple reasons. Larger commercial banks are currently charging rates north of 8%. A smaller bank or credit union can step up and be a hero to local commercial real estate owners by pricing these loans at 6.5% or 7%. Commercial real estate loans, if done responsibly and with a proper risk analysis, can be a critical factor in your long-term success by providing a long-term income stream that can also reduce reliance on short-term high-risk consumer loans. Commercial loans originated in this environment at rates in the 6’s should remain on the books far longer than a loan on a primary residence or a dozen auto loans will. These loans are a win-win for the lender and the borrower.

For more information contact Steve Borgerson at steve@sbloanconsult.com, or at 617-609-9747