FEATURE
3 Strategies to Free up Capital and Fund New Loans By Dennis R. Baranowski, Esq., Geraci LLP
S
ince the onset of the pandemic,
fear that rents will not be consistent
non-conventional lenders have
nor sufficient to service a loan,
faced two primary hurdles to
especially in the retail, restaurant,
making new loans.
•
Sales of loan portfolios to institutional investors; and
•
Collateralized loan obligations.
and hospitality sectors. It should be noted that Geraci has witnessed
With the trend appearing to be a
The First Challenge
a slow increase in the number
gradual uptick in loan originations,
The first challenge has been a
of originations in the form of
limited access to capital becomes
decrease in originations due to
loan transactions that we handle
that much more of an issue. In
restrictions aimed at curbing the
each month.
order to free up funds to fund new
spread of COVID-19 and a reluctance
originations,
many
lenders
are
The Second Challenge
turning back the clock to a time
with purchase transactions. Their
The second challenge has been a
when
reluctance is due to uncertainty
reduction in available funds to make
often relied on raising their own
surrounding
to
loans. Specifically, capital has been
capital through private investors,
pay rent combined with eviction
scarce for many lenders that rely on
rather than looking to institutions.
moratoriums.
one or more of the following:
Despite the limited availability of
•
capital markets, lenders can still
of
borrowers
to
move
tenants’
forward
ability
Commercial
originations have slowed due to
34
Lines of credit from banks;
non-conventional
lenders
