According to data from the Federal Reserve, the nation’s banks have increased their lending activity during the past few months. In addition to banks, alternative lenders like the Chicago-based financing firm Cambridge Realty Capital are also available to lend funds to parties that are seeking capital. Cambridge Realty Capital has over 30 years of experience in providing financing for various types of commercial real estate and currently specializes in senior housing and healthcare properties. The firm offers an array of financing options to interested parties, including bridge loan financing, conventional debt financing, HUD 232 lean financing, and sale/leaseback financing, to name a few. Senior housing participants and investors who are who are seeking capital for these or other purposes should contact Cambridge Realty Capital to learn more about its different financing programs.
Increase in C&I Loans
During the recession, lending dropped steeply as banks struggled to deal with the fallout from the financial crisis. Today, the situation for banks has improved significantly as evidenced by lending data that was recently published by theFederal Reserve. According to this information, commercial and industrial lending, or C&I loans as they are often referred to, increased by $40.2 billion during the four-week period that ended on July 2 and has now reached $1.73 trillion. This represents a gain of 2.38% during the period, which is significantly larger than the .2% gain that occurred during the previous four-week period, and is also the largest increase in C&I lending since February of this year. Furthermore, C&I loans increased by more than $106 billion during the first half of 2014; this is the largest six-month increase since the October 2007 through March 2008 period. Lastly, the value of all loans that have been made by banks this year has increased by $290 billion to $7.7 trillion and this is also the fastest growth in a six-month period since the end of 2008.
Economists are pointing to a variety of reasons to explain the recent increase in bank lending activity. First, the low interest rate environment that has been facilitated by the Federal Reserve’s relaxed monetary policy has led to an increase in demand for loans and banks and other lenders are attempting to meet it. Second, according to theFederal Reserve’s April survey on loan officers, some banks have started to relax their lending standards for C&I and commercial real estate loans. Lastly, a number of banks have significant amounts of cash on hand and are finding that they can make higher profits by lending these funds out as opposed to investing them in safe low-yield securities. Economists are now debating whether or not this increased lending activity will continue and while June’s positive jobs report indicates that the economy is growing and this could spur greater lending, regulators have also taken notice of the reduced lending standards that some banks have implemented and have begun encouraging some of the larger banks to improve their underwriting standards for non-investment grade, or leveraged, loans.
The Future of Lending
The Commerce Department should be releasing second quarter gross domestic product (GDP) figures sometime in the coming weeks and that information will give analysts some additional insight into how lending will proceed in the future. For now, many analysts expect lending to continue at its current pace, unless the GDP figures come in much lower than expected. Accordingly, while interest rates remain low and lenders are open to originating more loans, senior housing participants who are seeking inexpensive capital for growth, acquisitions, or other purposes should continue to look to Cambridge Realty Capital and the many different financing programs that it offers for their capital needs.