Many of our clients are reporting they are experiencing difficulties obtaining commercial loans from banks. Moreover, it is a problem that is being reported by many local area publications, including the Sacramento Business Journal. It appears that banks, although flush with cash, are hesitant to loan money to perspective borrowers. In many cases banks are requiring potential borrowers to over-collateralize loans before they will issue a loan. Which, makes many people ask, if I can over-collateralize the loan, why do I need the loan in the first place.
At some point banks are going to need to realize that in order to get the economy moving again, they will need to start lending money once again. Otherwise, the economy will remain stagnant. However, when banks start lending money again, I would suggest that they strike a balance between the current lending practices and the excessive lending practices of the early-mid 2000’s.
Ask us if you have any business legal questions.