selena1
Verified member
No one can dispute the fact that it is more difficult to obtain a loan of any kind in today's banking environment that it was just a few years ago. The bursting of the real estate bubble has affected almost all facets of the credit market both directly and indirectly. The advent of more in depth client information data, steps taken by Homeland Security enforcing anti-money laundering measures, the general tightening of credit restrictions, and the fact that almost no local banker has any true impact on credit decisions have come together to dramatically change the face of credit facilities in the United States. One could easily say that the lending community is for the most part unsure as to its path. Congress is attempting to establish deeper oversight in all levels of banking and finance. Banks have failed and either been taken over or simply closed. The cumulative result has resulted in making things difficult at best when making application for a loan at the personal level and nearly impossible when pursuing a business loan.
With this in mind one of the few bright spots has been the establishment, or reestablishment if you listen to old school bankers, of collateral influenced lending. In other words loan scenarios in which the loan is truly secured by collateral that the bank, or other financial institution, can attach and easily liquidate if there is a loan default. As we know loan collateral used to almost always consist of the offering of receivables, contracts, equipment, inventory, or real estate. In each case the collateral was somewhat difficult to deal with in that if attached it would have to be collected, discounted, fulfilled, or sold over time. With that in mind it is easy to comprehend why bankable collateral is fast becoming the flavor of the day.
Over the past decade or two it seems that banks and other lending institutions have gradually pulled away from liquid collateral. The reason for this is probably two fold. First is the fact that mortgage lending is always at the forefront of the market and directly affects the rest of the market.
With this in mind one of the few bright spots has been the establishment, or reestablishment if you listen to old school bankers, of collateral influenced lending. In other words loan scenarios in which the loan is truly secured by collateral that the bank, or other financial institution, can attach and easily liquidate if there is a loan default. As we know loan collateral used to almost always consist of the offering of receivables, contracts, equipment, inventory, or real estate. In each case the collateral was somewhat difficult to deal with in that if attached it would have to be collected, discounted, fulfilled, or sold over time. With that in mind it is easy to comprehend why bankable collateral is fast becoming the flavor of the day.
Over the past decade or two it seems that banks and other lending institutions have gradually pulled away from liquid collateral. The reason for this is probably two fold. First is the fact that mortgage lending is always at the forefront of the market and directly affects the rest of the market.
