Regional Commercial Lending Experts See More Analysis and Red Tape as Possible Challenges in Current Lending Environment

WHITE PLAINS—Commercial lending experts in the Hudson Valley region believe the lending landscape could be facing some challenges in the current real estate market in terms of additional and potentially more lengthy reviews of loans on the table. Four leading lenders in the commercial industry shared their insights recently at a panel discussion for Hudson Gateway Association of Realtors Commercial & Investment Division at HGAR’s White Plains headquarters.

“Regulations are constantly changing, and I think we’re seeing a little more scrutiny now than before,” said Elizabeth Arato, Senior Vice President of Commercial Customers Bank, at the CID session held on Sept. 26. “It’s also a bit more tedious to get the loan to the finish line because of the heat we’re feeling from the regulators.”

Panel moderator Robert Withers, President & CEO of M1 Capital Corp. of White Plains, agreed. “While there are still some bad loans out there, I think the bottom line is that lenders need to look at the borrower’s entire track record. We need more make-sense lending,” he said.

Rock East Funding provides private lending, which is not regulated, but President Michael Haberman has had his share of challenges as well. “As rates shot up, owners of large properties had to refinance, while dealing with other situations like rising insurance and energy costs,” he explained. “As a result, some capital providers became skittish about long-term loans.” Still, Haberman said he remains confident that some larger capital providers will get back in the game.

Dana Malley, Senior Vice President of Harvest Small Business Finance, deals specifically with owner-occupied properties and his firm’s loans are guaranteed by the U.S. Small Business Administration. “However, we look closely at everything—assets, cash flow, financial history, etc.—whether the borrower is refinancing or expanding,” he said.

Haberman agreed that unforeseen circumstances, such as medical bills could lower credit scores, and lenders should take that into account if payment histories have been positive. “I think we can work around these things,” he added.

Concerning the recent Federal Reserve interest rate cuts, Arato believes that will create more interest for future deals. “For those already in the pipeline, they’re going to want to close at a lower rate, but I think the cuts will definitely start to bring more deals to the table,” she said.

All panelists agreed that “relationship lending” is the most important asset in any type of lending. “It’s all about customer services,” Arato shared. “For us, 90% of our clients are repeats and the number one reason is the ease of doing business,” Haberman added.

For small businesses, the good news is that a new rule change expands the $5-million cap for borrowers. “Now, for instance, if someone has multiple businesses, we can lend multiple products above the $5 million cap,” Malley explained. “This is great news for someone who wants to expand more than one business. Of course, this also benefits the local economy.”