Remember This: There are a 1,000 of THEM and only ONE of YOU!!

It can be down right scary. What if I say the wrong thing? What if my credit score isn't high enough? What if he shoots holes in my business plan? What if she doesn't believe that I can increase the occupancy rate to 90%? Oh, I need to get this loan closed in 30 days or I'll lose this great opportunity. My lender won't call me back. Have you felt these emotions when you last dealt with your bank? In short, do you look or feel like the picture below when dealing with the commercial loan process?

Let me tell you a secret. A secret that your banker doesn't want you to know. You can now obtain your loan to buy that business or buy that property from ANYWHERE on terms Better than what your loan officer can give you. You can buy that property with the help of a private lender in California. A hedge fund in Texas will help you acquire your competitor. Why or how did this happen? Well I'll get to that later, but it's important to know more about this nasty little secret.

Why doesn't your banker want you to know this devastating secret? Because, if you knew this secret (and now you do!) then he or she would have to return your phone calls or worse they would have to close your loan on your time table, versus, the banks. Better yet, they wouldn't be able to make you jump through hoops with questions and documents only to say NO leaving you with no options, and no time to find another lender. Well, thanks to the globalization of finance, Main Street USA now has access to capital from Asia, Europe, and all over the United States.

See, despite what you see on television regarding the residential mortgage crisis or the collapse of Bear Stearns, the United States has one of the most efficient capital markets system. Even with all of its warts (savings and loans debacle of the 80's, the collapse of the hedge fund Long Term Capital Management as examples of our warts), the United States' financial system attracts capital from all over the globe.

What this means for you- the Main Street investor or business owner? Well, the massive amounts of capital invested in the United States continues to chase fewer and fewer larger transactions. This puts pressure on putting the money to work, prompting these capital providers to lower their loan size requirements.

So now, that real estate owner in Newington looking for $50,000 cash out on his properties can obtain his loan from a private lender in Pennsylvania who's largest investors are private banking clients from Europe.

So the next time you call your banker, I bet he or she will take your call. Suddenly, they're hoping you take their loan; hoping that they don't say something that will make you go elsewhere. Remember, there are 1,000 of them and only One of You. You're driving the bus.

Storm Clouds - First Bolt of Lightning

From time to time, I like to jump in and comment on the current lending environment facing commercial businesses and real estate investors. Today's entry, hopefully isn't a harbinger of things to come.

I know that several other large private lenders have closed up shop however, most of those closures stemmed from these lender's exposure to the residential market and not due to commercial. Well, we have our first potential casualty from a pure play commercial lender.

CIT Group yesterday drew down 100% on its $7.3 billion back up credit facility to meet current cash flow needs, and cash to service debt in the near term. CIT has to refinance approximately $3.0 billion in short term debt in 2008.

The reason for CIT's troubles stem from the disruption in the commercial paper market - which is almost non existent for lenders. Without access to the commercial paper market, CIT has to rely on other sources of funds, such as commercial deposits and other deposits. CIT's lack of a substantial deposit base created a liquidity crisis.

CIT management stated that the Company has the liquidity to fund its operations in 2008, but commented that it has to reduce its lending to new customers to preserve capital. This might be a sign of relief for CIT's current business customers, but it reduces the total amount of capital available to all commercial business and real estate investors.

The issue with the commercial paper market are intertwined with the general lack of investor confidence in the assets (loans) supporting these obligations. It started in the residential mortgage market, and know has swept into the commercial debt market.

The Fed and Wall Street hope that the recent liquidity added to the market will prime the pump to allow investors and lenders to create a floor in the value of these assets supporting the obligations. A floor, created by good old buying and selling (trading) that is the foundation of our market system, will signal to all parties that we reached the bottom of the residential and now commercial debt market leaving only upward pressure on asset values. Upward movement in asset values with increase the acceptance and ability of investors to buy lender ogligations. Let's hope they are right. If not, the storm could turn into a hurricane.