Maybe it’s the severe level of skepticism that mainstream media may have for nimble, cyber journalists, or maybe it’s more of the quickness that these folks get to the heart of problems, rather than skirting around them.

Whatever the case may be, the hard money bloggers, freelance finance analysts, and other lone sentinels knew very well that banks are holding onto deals, rewriting and restructuring them, hoping that their clients will turn business around to repay the bank.

As they continue to rewrite, they seize up capital that could be spent on servicing new loans to qualified borrowers.

True, these banks could just let their clients default on their loans and write off the loss, but this means the banks would take a massive hit in their capital base if they aren’t prepared ahead of time for such a loss. If they send their clients away to other banks capable of handing their near-delinquent borrowers, the borrowers may take their loyalty, and their deposits, with them.

The Wall Street Journal covers banks “Extend and Pretend” tactic as both a strategic move by banks to wait out the recession, but also as a foreshadowing of Japan’s own capital stalemate decades ago. They go into a bit of detail with an Umpqua deal that has been extended since 2007 or so.

Maybe all of this attention on this lose-lose scenario that conventional banks seem to be putting themselves in will bring to light the advantages of a hard money solution.

True, hard money rates are above market, but there is a lot of money available through hard money providers to pay off loan maturities without any big change in customer loyalty or deposits. Hard money lenders, like Fairway, are not interested in stealing your client. We really don’t have the function to do that so it’s seriously not possible.

We would like to see some more capital free itself up to encourage loan demand. Recovery means more business, more spending, and even more demand. That’s not a bad thing.

According to a Business Insider article on banks beginning to lend again, Analysts reported that July continued the increasing trend of conventional commercial lending, extending the streak to two months in a row.

The latter portion of the CNN Money article reflected upon loan demand being weak, regardless of bank activity. This made sense as business owners continue to hold on to their cash reserves through the rough economic times. Taking out a loan is not as attractive as paying down current debt. Of course, this route takes a toll on some business spending, such as equipment renting, product development, sales, and marketing.

The Business Insider article makes a similar forecast about loan demand as of July 2010, extending the downward estimate for the remainder of the calendar year. Reduced consumer spending, which signals businesses to hold off on supply if the demand isn’t there, is one factor that is assumed to keep loan demand at a low level.

We’d like to observe how loosened bank loan regulation and the insertion of fresh capital from entities entering the commercial lending market, such as bond traders and other deep-pocket institutions wanting to capitalize on the commercial lending market, will affect the markets through the end of 2010.

As credit loosens up, the roles of conventional money come back into play. Down the food chain, hard money opportunities arise for customers who need the tool to make ends meet in order to qualify for conventional financing at a later point.

Nimble bond trading firms, like Cantor Fitzgerald, are making a move into commercial mortgage originations according to a blurb on the Wall Street Journal’s Plots & Ploys section.

While property prices start to stabilize, other firms outside of the commercial property lending segment are making their way into the market while traditional capital sources continue to hold credit close to the chest.

While this additional competition across all balance ranges may seem daunting, long-time competitors of small-cap commercial lending know that it takes more than a big wallet to provide funding to our various target markets.

There are relationships to be created and eyes to be attracted to such offerings. This doesn’t mean we can sit still. If a competitor can create a way to offer a more attractive pricing format while being able to offer extra values, and we do not move an inch to combat with better value offerings, we might start to see our trusted referral sources vanish right and left.

Wells Fargo’s currently processes checks from highest amounts to lowest, which in their policies, they intend to do so in the best interest of their customers. Imagine which payment you’d like to clear first—that cup of coffee or your mortgage? It makes sense at first glance.

However, this policy runs counter to unforeseen internal corporate emails and memos read by Judge Alsup that emphasize that the policies were to maximize the number of overdrafts. This intention is much different than looking out for customer interests.

While details of the case slowly aggregate on the internet, the case in point for today’s post is to shed light on intention. We are big on intention when it comes to the parties we involve ourselves with on a daily basis.

• Commercial Brokers: Our intention is to work with you to find a home for your deals, whether it is with us, or with another lender.
• Residential Brokers: We want to facilitate your deal so you can help your borrower confidently.
• Bankers: Preserving your client relationships while assisting in rehabilitating their business through our alternative financing is our goal.
• Borrowers: We implore you to get to know what we have to offer and know that if it is not a solution that fits your needs, we won’t push you to do anything. We’ll most likely show you someone else’s product that fits your situation.

The bottom line is that what smaller lenders can learn from this is that if you practice business with a firm, genuine intention, your customers will appreciate you for it. Saying one thing, but practicing it in a means that harms your customers is counter-intuitive toward building financial relationships that are quite sensitive in this current economic climate.

While credit unions and proponents of this proposal see benefits of increased borrowing, which could lead to different phases of subjective economic recovery, opponents see the move as infringing upon traditional bank roles.

Opponents also believe that credit unions are ill-equipped to handle commercial loans, according to a St. Louis publication recently covering the credit union lending limit proposal.

As an unconventional source of financing, we look further down the food chain. This fresh injection of capital could help loosen up an already stiff market. Our role is dependent on the demand for operation, acquisition, and mission-critical loans.

However, according to statistics from the St. Louis article, only a small handful of credit unions across the nation are even close to reaching their 12.5 percent cap, illustrating stagnancy in loan demand.

We’ve always had a strong and rigid philosophy when it comes to underwriting our hard money loans. Though credit unions would incorporate a more traditional set of criteria and conditions, are they set to handle the nuances of commercial lending?

Could this addition of loan supply change the market for the better? How would things differ in our segment of the market?

Lance’s article, called “Back up Your Data,” encouraged mortgage brokers to take a moment out of their hectic schedules to choose one of two convenient ways to back up their contact lists, deal documents, and other sensitive materials.

A broker can gain some peace of mind by either purchasing an affordable portable hard drive, or subscribe to a remote backup service. More details can be found in the Scotsman Guide article on broker-friendly technology.

We’d like to congratulate Lance for having an article make the cut into the Scotsman Guide and for representing Fairway America in a broker-friendly, positive light on a national level.

Sharon Bernstein of the L.A. Times covers small-cap alternative funding in her web column “When Money is Hard to Get, Small Businesses Turn to Hard Money.”

Bernstein introduces readers to hard money through a short video, followed by an article on small-cap hard money loans and the small businesses owners who seek them.

She covers an extreme example of a hard money loan, stating a high interest rate that causes a borrower to pay more than double their normal rent just to continue to lease the property that contains their business. One of her examples states costs including an interest reaching 36%, plus fees.

The most notable part of the article, despite its grim portrayal of small-cap hard money loan logistics, is its awareness that these loans are one of the only solutions available to small business owners, allowing them to pay mortgages, meet payroll, and have capital to produce more business.

They may take a hit to profits and operational funds, but it allows these borrowers to keep their businesses going through these hard times when they cannot find traditional funding through credit-frozen banks.

In somewhat breaking news, federal bank regulators approved a two-year old requirement passed by Congress that calls for Loan Officers to register into a federal database across the nation.

According to the Associated Press story, Loan Officers who are employed by any bank regulated on a federal and state level must comply.

By the end of the year, all fifty states are expected to participate, increasing the level of regulation not only vertically, but also horizontally through the front doors of banks.

While this may help assuage consumer fears in the wake of banking reputations that arose from the recent economic meltdown, how does it really affect our industry, especially our small niche of small-balance commercial lending? Is this kind of effort, money, and regulation as effective as it seems? We’d like to hear your opinion.

According to Inc., the Senate voted 60-37 to attach the $30 billion program to go before the Senate once more this week in an attempt at generating what’s projected to be nearly $300 billion in leveraged small business loans.

On a national lens and in the shadow of TARP, it looks like another bailout. However, as small business financing specialists, we know that this money is in demand by the entrepreneurs and owners who need it as operating capital, as property acquisition capital, or as equipment leasing capital.

This money is borrowed to make ends meet, to launch new products or services, and to meet payroll and tax expectations. When businesses can breathe, production continues. Jobs and progress proceed as small business owners push through these troubling economic times.

What are your thoughts and opinions? Only by vocalizing what you see and feel in your own community can we dissipate the misconception held by the mainstream media that it’s “just another bailout.”

The Wall Street Journal wrote a piece on small business owners who lend money to their employees to help them catch up with other fees.

The article touches upon different examples of small loans, such as one employer who lends around 25 different loans, up to $4000 each, to help his employees make ends meet.

Another entrepreneur, who felt a strong bond with their employees, lent around $12,000 in separate loans to her 12 employees.

Due to the strong relationships between owners and employees, these loans are often repaid in full. It builds a strong relationship and loyalty between employer and employee. It also develops a strong reputation for the company when word of the generosity hits the media.

This act is a great illustration of the depth that some small business cultures can achieve.

Though these are examples outside of our industry, and more on a community level, it does break the constant stream of negative news that industries based on lending receive as of late.

It’s refreshing. It makes us wonder, “What equivalent good can we do for our different constituencies?”