After the Global Downturn that began in 2007, bank failures sharply increased around the world. Governments and other regulatory bodies enacted various new rules in an attempt to stabilize their economies that drastically affected the Profitability of Commercial Loans at banks. In the United States, we are just now beginning to see signs of economic recovery in several sectors of our Nation’s economy. As the economy recovers, it is only natural that the demand for commercial lending is beginning to increase as well.

As the economy continues to strengthen, nearly everyone in the country, from homeowners and consumers to bankers and stockbrokers, wonders just when the Federal Reserve will begin to raise interest rates. According to a recent article in the New York Times, the general consensus among economists as well as some business leaders is that we can expect an increase in rates as early as this September.

A recent report by CNBC contradicts this sentiment, as China has recently taken steps to lower its interest rates and devalue its currency, with additional countries expected to follow suit. With rumors of potential currency wars and a still struggling global economy it is unlikely that any of the newer capital requirements, such as those imposed on commercial construction loans under Basel III, will be relaxed in these uncertain times.

Regardless of if, or when, the Federal Reserve does choose to raise interest rates, or if the current economic slowdown in China eventually spreads to the United States, the one thing that is certain is that now, more than ever, it is important for lenders to have a proven and reproducible methodology for their commercial loan pricing. As the world saw at the beginning of the last global downturn, even large banking institutions were brought to their knees by inefficient and ineffective models that failed to calculate profitable commercial loan prices.

At The Hurdle Group, we have developed a commercial loan pricing model that is reliable and consistently produces results that can increase the profitability of your organization’s loans. The PULPs Loan Pricing System is an online model that allows lenders to easily see how even small adjustments to the structure of the loan can have a tremendous impact on that loan’s profitability. This allows you to competitively price your loans, increasing profitability, while also increasing the efficiency and productivity of your organisation’s individual loan officers.

This model allows users to ensure that all of their commercial loans are priced consistently throughout their entire portfolio so that you can rest assured that you are meeting the government’s capital requirements and other federal regulations. Get in touch and contact us today to find out more about how PULPS can help you to meet your organization’s goals and investors’ expectations!

To talk more about this, or anything else, let The Hurdle Group assist you.