Thursday, December 07, 2006

New Guidelines Cut Real Estate Business Loans

On September 11th, I asked "Will Real Estate Loans to Business Dry Up?". The Wall Street Journal had reported that bank regulators were becoming increasingly concerned that too many bank loans were secured by business real estate creating an undue level of risk in bank loan portfolios.

Today's LA Times reported that Federal regulators issued guidelines Wednesday on the amount of commercial real estate loans that banks can hold without triggering greater oversight, a move widely opposed by small and mid-size banks.

One of the big questions is whether Federal regulators will interpret these new guidelines as guidelines or as hard and fast thresholds in determining which banks need to cut back on their real estate business loans.

If your company needs a business loan and is thinking about using real estate as collateral, it might be helpful to see if your bank is close to the new thresholds and has capacity to make your loan. Otherwise, maybe it's time to think about using other business collateral - receivables, inventory and equipment - to secure the needed funding.

Need help finding the right lender for your secured business loan? Read "Matchmaking for Business Loans" and give me a call!

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