Profitable Commercial Loan Pricing Just Became More Competitive with Entry of Credit Unions into Commercial Lending Market

Since the 2008 global downturn and resulting financial crisis, the ability to competitively price commercial loans has been difficult for most bankers. Systemic risk regulations, increased capital requirements for banks and the enhanced regulation of banking entities are all components of the Dodd-Frank Act that were enacted to help stabilize the financial system.

Meeting the increased capital holdings requirements of these regulations, as well as the newer profitability requirements, mean that now there is even less margin for error when calculating your entity’s Commercial Loan Pricing.

This already challenging landscape may have become even more competitive with the recent announcement that The National Credit Union Association has made it easier for credit unions across the country to begin to offer larger and faster commercial loans to businesses.

According to a recent article in the Pittsburgh Business Times, credit unions that are federally insured will experience a host of changes designed to make it easier for these credit unions to offer competitive commercial loans.

The following list is just some of the changes that will make it easier for credit unions to offer faster and more competitive commercial loans:

• Increases total loan limits for a sole borrower from 15 to 25% of net worth.
• Eliminates the requirement for borrowers to personally guarantee the loan.
• Increases loan limits for development and construction loans.
• Establishes an 80 percent limit on Loan-to-Value ratios.

Since banks have to deal with the hassle and expense of taxes and burdensome regulatory compliance costs that these credit unions don’t face, it automatically becomes a greater challenge for smaller local and regional banks and similar lending entities to meet their capital and profit requirements in the face of this increased competition.

The PULPS Commercial Loan Pricing Model can help banks and other lenders to easily increase their profitability in this challenging environment by providing an easy to use, reliable, consistent internet based commercial loan pricing model. The PULPS model enables users to see at a glance how various smaller, incremental changes in the structure of the loan can have a dramatic effect on the profitability and pricing of a commercial loan, while maintaining equality throughout your entity’s entire loan portfolio.

Why not get in touch with us and Contact Us today to learn more about how the PULPS model can help increase the efficiency of your group’s loan origination process as well as improve the productivity of your organization’s loan officers.