Facing Hard Times
There are lifelines to be found even as traditional lenders shrink their footprint
The COVID-19 pandemic has radically changed the commercial real estate lending landscape as well as the outlook and predicted performance of these assets. Banks have pulled back and the lending market itself remains in flux.
Despite that, however, there are options for commercial mortgage brokers seeking financing during this challenging time. Private institutions that offer short- and medium-term bridge loans are expected to expand their reach as banks and other traditional lenders retreat.
At the beginning of 2020 and prior to the pandemic outbreak this past March, traditional lenders were already cautious and anticipating a slowdown. With the onset of the coronavirus crisis, the Federal Reserve took several emergency steps in March to shore up the economy, pushing the already low federal benchmark rate down to nearly 0%.
Key Points:
- The COVID-19 pandemic has radically changed the commercial real estate lending landscape.
- Banks and other traditional lenders are pulling back from new deals of all types.
- Private lenders are likely to take on a greater role in funding deals immediately after the commercial real estate market reopens.
- Direct private lenders can fund a wider array of deals because they don’t rely on intermediaries.
- Projects that have been delayed or put aside will need fast and flexible financing options from bridge lenders.
