Economic Response
(401) 525-6544
"People aren't spending; therefore there is no Velocity of Money"
There are fewer new businesses opening in Rhode Island not only because of the national economy but also due to a lack of traditional lending sources. But there is money available - If you know where to look.
The business community has long depended on a single source for their financing: their banks. If the bank was going through turmoil and would not lend any money, then a business owner could transfer their account to another bank or credit union. This traditional type of thinking is evolving and is archaic in my opinion.
Financial needs in the future are going to come through a variety of sources, and how banks lend will change dramatically. Government regulators will dictate the future of all lending activities.
Portfolios will be more balanced and underwriting criteria will be extremely stringent.
As a former bank president, I have lived through and survived numerous downturns and economic cycles. There was a time when a single bank was the lifeline for all financial needs - both personally and corporately.
Think back to when a bank was where you got your car loan, and then the auto industry created their own source - secondary market securitized sources. Now the auto industry has lost the secondary market (temporarily) and now has established the credit unions as their primary partners.
Think back to when a bank was where you got your house mortgage, and then… need I say more? At least we are going back to basics. The government believed that every American citizen was entitled to own a home. Not earn it but entitled to it. Back to basics.
Think back to when a bank was where you obtained your student loan, and then secondary market sources were created that offered more competitive rates.
What I am driving at is that over a period of years there were traditional bank products that found new markets. Liquidity is now the primary concern for financial institutions. You don’t create liquidity by investing in longer-term mortgages for your portfolio or have a concentration in real estate.
The question in front of everyone is “How do I get commercial mortgage financing that is competitive in rates, terms and fees and be less constrictive?”
There IS MONEY AVAILABLE; you just have to know where to look. You can get commercial mortgage rates starting at 7% and up, DSC (Debt Service Coverage Ratio) at 1.20, LTV (Loan to Value) at up to 80% and even 90% with Seller holding a 10% second mortgage for all types of income producing properties. Construction to permanent loans are also available for owner occupied projects. There are also conduits for asset based (inventory and accounts receivables) financing.
As a former banker, I have the knowledge to structure loans according to the needs of the client and not the needs of a financial institution’s loan policy. The reality is that alternative funding sources have more flexibility. Partnerships with banks provide long-term financing and assistance in establishing Lines of Credit and depository relationships with open-minded institutions.
What businesses have to realize is that what “once was” is “no more” or at least is radically different. Once economic change has affected your company, you, your short and long term goals and thought process must change. Your mind has to be more open, elastic and look for creative alternatives. Professional resources and MONEY are available … if you know where to look!
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Winthrop Real Estate Solutions, LLC
1240 Pawtucket Ave, Rumford, RI 02916
Howard L. Weldon
(Direct) 401-525-6544
(Fax) 888-679-0773
hweldon301@msn.com
Ewa S. Slusarek William C. Bryson
(Direct) 401-921-6268 (Direct) 401-487-2280
(Fax) 401-463-0164 (Fax) 888-679-0773
ewaslusarek@aol.com wbryson2280@gmail.com