FEATURE
Moving Forward, Looking Back
C
By Tony Ingoglia, Socotra Capital
rises are often described
loan volume was reduced overnight
behave amid moments of crisis as it
as accelerants for change.
and lenders who primarily sourced
relates to the loans being originated.
Actions
capital via these channels were
What
forced to pivot and forge new
repeatedly with each subsequent
become everyday commonplace. The
capital
fulfill
financial crisis is that traditional loan
COVID-19 pandemic brought about
their
pipelines.
buyers in the secondary markets can
disruptive changes to the private
Unfortunately,
these
change their risk profiles and as a
lending industry that have forced
new relationships can take time
result, their capital allocations, just
many of us to reconsider not only
and the world of private lending
as easily as an individual investor.
the types of loans to originate, but
can move quickly, causing undue
also the types of capital needed to
duress on borrower relationships
When sourcing capital for private
adequately service our clients.
or potentially losing high quality
lending, there are various types
loans. It takes a significant amount
of capital and they all come with
to
of time to establish a streamlined
varying
disrupt all our daily lives, the first
process that satisfies both borrower
profiles, liquidity needs, compliance,
reverberations in our industry were
and investor needs. What every
duration, and hurdle rates. When a
felt in the secondary market, where
lender needs to ultimately decide is
lender evaluates their loan pipeline,
large institutional or traditional loan
what kind of capital partners they
they need to also make sure that
buyers paused their purchases, or
want to have for the long term and
the capital they are sourcing is
drastically altered their respective
get a better understanding of how
appropriately matched across all
credit boxes for loans. Consequently,
their respective capital partners will
these variables within their loan
unlikely
When
30
or
the
once
considered
improbable
pandemic
quickly
began
relationships respective
loan
to
establishing
our
industry
degrees
of
has
cost,
seen
risk
