What To Look For In A Post-Pandemic Lender

The coronavirus pandemic strained the relationship between building owners and lenders.

While some borrowers discovered that their lenders were willing to come to the table to negotiate and relax loan terms, others found their lenders impatient as they experienced major pandemic-related revenue drops 

Additionally, many banks tightened up their lending standards across the board, making it more difficult for clients to get the funding they need to stay stable or recover from the effects of this global crisis. 

“During the pandemic, you found out what your lender was made of,” said Solomon Garber, senior vice president of business development at Northeast Bank. “The economy was humming along for 10 years and then with the pandemic many lenders clammed up. Moving forward, borrowers need to really think about if they want to work with lenders who are more user-friendly and willing to work with clients in both good times and bad.” 

Garber said that as the market gets back on track, it’s more important now than ever before for borrowers to do their research. They must make sure they are working with lenders who will be able to help them reach their goals without leaving them on the sidelines should another crisis arise. 

With that in mind, Garber, together with Jonathan Levirne, who also serves as a senior vice president of business development at Northeast, offered four criteria that borrowers should look for when choosing a lender. 

A National Reach 

Most value-add investors are looking for opportunities not just within a single market, but all over the country, Levirne said.

Having a lender with a national reach who can provide insight in every market can simplify the acquisition and management process.

Many regional banks may not have a diligence team or data professionals who understand how to operate outside of their market, Levirne said, and investors need to take that into consideration and determine whether they will be able to meet their goals.  

“We are roughly a $1.7B bank, but we are able to lend all over the country, which is unique,” Levirne said. “Most local and regional banks will rarely go outside of their geographic footprint but we’re in every state and have experience in nearly every market. We are purely real estate value-driven and we will almost go anywhere in the U.S.” 

A Willingness To Loan On Transitional Properties  

In the past year, real estate borrowers have had cash flows disrupted, making it important to work with a lender that is comfortable embracing transitional properties. 

“Right now, many buildings are operating at less than full occupancy, and that’s to be expected based on what has happened with the market,” Garber said. “It’s important to have a lender who understands this and who is willing to give you the money you need to get from a place of disruption to a place of stability.” 

He added that some real estate may require a little more care throughout its life cycle. A lender should be willing to go on that journey with a client and follow their business plan as they take a building from its current state to a more profitable one. 

A Diverse Customer Base 

According to Levirne, a trustworthy lender will have the ability to serve a wide variety of customers — not just the institutional clients that own millions of square feet of commercial space, but the smaller borrowers whose families may have held properties for generations.  

“When you find a lender with a wide customer base, it shows that they’re capable of treating clients of all sizes with an equal level of attention and respect,” Levirne said.   

Openness To Sponsors With Past Issues 

Not every sponsor has a perfect record. Many have a bankruptcy or foreclosure in their past, and that could shut them out of working with some lenders. But the right lender, Levirne said, goes beyond checking a few boxes and saying “no,” if the sponsor doesn’t look great on paper. 

“The right lender will look at the deal and business plan overall and make a judgment based on that,” Levirne said. “If it’s a desirable deal, it’s worth giving it a chance, despite a sponsor’s history.” 

This feature was produced in collaboration between Studio B and Northeast Bank. Bisnow news staff was not involved in the production of this content. 

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