Colorado Springs has been enjoying a revival of interest in business loans and lending as the spring months approach. With local real estate markets are heating up, lenders are offering deals on a variety of commercial and residential real estate loan products for business owners and investors. With state-of-the-union interest in the Colorado Springs area, business loan interest rates have come down from their historic highs. And some of these loan providers are willing to help you save time and money with short-term cash advance loans to help your Colorado Springs real estate business or personal projects along with your Colorado Springs real estate purchase.
Thanks to a multi-pronged effort by the banking community and legislative leaders, the Colorado Springs region's growth and development have become a priority over the last few years. The legislature has recently approved widespread tax cuts for individual earners, reducing the corporate tax rate and other measures aimed at making the business community more competitive. And just recently, the Colorado Springs city government announced a new program focused on establishing a “good local economy” in its wake. These and other initiatives have played a part in encouraging more bankers to consider the feasibility of providing small business loans and other loan products to small businesses and individuals.
As a result, the banking industry in Colorado Springs has taken a more aggressive stance in dealing with troubled borrowers. According to the latest statistics, small businesses – defined as those operating for less than $1 million – account for nearly 25% of the region's total business revenue. Banking officials say that if these small businesses continue to thrive despite the current economic situation, the current home loan program might not be sufficient to support the continued growth of these businesses. “We believe that with the current state of the real estate market, along with the recent string of bank failures, most Colorado Springs homeowners will be under financial stress if they attempt to refinance,” said Robert Copeland, Executive Vice President of the Denver-Rocky Mountain National Bank. “While we understand the frustration, we believe the solutions offered by the CMHC (Commerce-California Mortgage Interest Rate Authority) will help alleviate some of the strain.”
The Colorado Springs business lending association is one of several groups working to promote local control over finance decisions. These groups are particularly concerned that the current practices of local banks allow borrowers to circumvent the competitive process that applies to them when applying for a traditional home mortgage loan, business loan or consumer loan products. In addition to requiring multi-year commitments, they also coerce borrowers into a contract for 30 years or more with terms much more favorable to the lender than those required of them by traditional lenders. This often results in an investment in a business that will not generate significant long-term income, but rather requires periodic maintenance payments that have an interest rate far below that applicable to borrowers in most other instances.
Many successful business entrepreneurs have successfully obtained home mortgage loans and other types of financing despite having less than stellar credit. In fact, many businesses have been successful despite having a poor credit history. However, the reasons for their success may be different from the reasons for a poor credit history. For example, a business that operates as a franchise operation has significantly greater operational complexity and may utilize various types of financing instead of relying on conventional means, such as commercial real estate loans.
While this may seem at first glance to be an argument against multi-party loan underwriting, there is actually a basis . . . . . . for this concern. As previously stated, the credit bureaus typically do not include certain information in their reports that would qualify the borrower for sub-prime lending. Thus, a bank acting as a conduit between a borrower and the credit reporting agencies does not necessarily view its business loan or consumer loan as a competitive deal. The banks view the arrangement between them as a commercial transaction between them and the credit bureaus. Under the guise of protecting the “credit reporting” process, the banks are preventing applicants from attaining mortgage loans based on their credit scores.
This is a complicated issue for the various credit bureaus because there are different versions of the pandemic. Depending on which version you read, the credit reporting companies are required to provide the same information to the various government offices. If the information provided by the credit bureaus is different, then there could be a significant impact on the government's ability to provide dependable pandemic information to the citizens. There is also the issue of the quality of the reports themselves. In order for the credit bureaus to make good on their responsibilities to the federal government, they need to consistently provide a high-quality product.
Historically, the U.S. Small Business Administration (USBA) has had a lot of success providing reports based on the more recent version of the pandemic. The current pandemic, “Guantanamo bay syndrome,” has a much longer pedigree and exhibits very different criteria of what should be included in the report. One possibility is that the current criteria being used will not be as effective when it comes to applying for loans and other types of commercial financial transactions. It's possible that the final report from the USBA might not include any guidelines at all for applying for small business loans. Whatever happens, it appears that the future of the pandemic will be somewhat different than the past.