E19: Season 2 Episode 9: Commercial Lending

Everything You Need To Know About Commercial Lending 

Tom Dunlap speaks with George Cave, senior vice president at Sandy Spring Bank, the leading lender in commercial lending, and Robert Deal, a real estate, commercial, and investment attorney. They discuss the intricate world of commercial lending.  

What is Commercial Lending? 

Commercial lending is banking services for businesses. Commercial lending is anything from a business loan, to a commercial building mortgage to consulting and advising. 

The Legal World And The Commercial Banking World Are Key Partners 

The best relationships are when the two partners live and work in the same communities and can directly relate to needs around them.  These partnerships are so important. Anyone paying for commercial lending services needs to the person communicating to them to be clear, concise, and efficient.  The legal side focuses on council to the lender, protecting the bank’s investment, and making sure the commercial borrower can fulfill their obligations.  These partnerships get the transactions done with everyone in mind.  

Commercial Loans Versus Home Mortgages 

Sometimes getting a home mortgage feels like signing your name a lot without really understanding what all you need to do. Commercial lending is a little different. The legal side of the commercial lending team is tasked with the job of making sure these business negations are done fairly and by the guidelines stated in the documents. The legal side is looking to create a sense of trust between them and the borrower, and to create ongoing clients.  

Commercial Banking Is More Personal Than Individual Banking 

Everyone has online banking when it comes to their personal finances, so in many cases you wouldn’t have to step into a bank branch. The commercial side is different, the needs of businesses are constantly evolving and a personal relationship goes a long way with business owners and their trust. When you know your clients on a personal level you can bank more proactively. People need to feel like they aren’t an account number, but a human with individual needs.  

Behind The Scenes Of Commercial Lending 

Commercial landing is all too familiar with the reality of economic recessions. When something as detrimental to finances happens as a recession, the commercial lending world needs to get legally creative. The personal relationship that has been established will help the lender understand how to work with all of their clients in dark financial times. Everything from recessions, to the loss of multigenerational wealth is taken into account by the commercial lender. The better the relationship, the more solutions can be brought to the table to get the client back on track.  

Core Business Model Of Commercial Lending Remains The Same 150 Years Later 

The way commercial lending works is by trust. People trust the bank with their money, the bank then lends that money out to clients they believe will be able to pay it back. This is the core banking business model. Without the trust, it won’t work. When someone can call a bank and speak directly to a senior loan officer that is extremely appreciated and builds that trust. The client wants that kind of attention, versus calling an 800 number and talking to a computer.  

Business Expansion And Commercial Lending 

Business owners are looking for a partnership of sorts when they seek out a commercial lender. The business owner is already taking a risk when starting a business, and now that they need a larger space or expansion of any kind, they need to feel confident that the person they work with are as invested as them. They are seeking someone to be invested in this venture with them, which is so important because change is inevitable in business.  

Finding The Right Commercial Lender 

Word-of-mouth referrals are always the best. Knowing how a first-hand experience went goes a long way with a potential new client. The potential client is seeking advice and if you as the commercial lender have impressed their colleagues, the potential client already believes they will be impressed as well. Reputation in the market is key.  

Takeaways From This Episode 

Relationships are extremely important in commercial lending. Choosing the right legal team to partner with is a huge aspect. Understand your local resources, and marketplace. Understand your competition, and figure out what you value most as a commercial lender.  

Resources 

Sand Spring Bank Website 

Tom Dunlap Linkedin 

George Cave Linkedin 

Robert Deal Linkedin