THE LENDING ENVIRONMENT HAS CHANGED Like most things, the lending environment has changed recently due to COVID-19, and it is taking buyers and sellers by surprise. Underwriting timelines are being impacted and loans are taking longer to process. Banks are now less likely to flex their requirements to help people qualify for a loan. Why is this happening? There are several reasons. 1. Earning and revenues are coming down and banks are weary. 2. Few lenders process loans under $150,000 and those few lenders are now getting inundated with volume. 3. Because the same people that processed PPP loans are also processing business loans, this is impacting banks' ability to assess and close on new 7A loans. 4. Banks now have a lot of capital tied up in PPP loans. 5. Banks are now doing more due diligence and requiring more documentation, so underwriting is taking longer than in the pre-COVID environment. 6. Staff are being impacted by COVID and distancing guidelines so there are fewer people on location to work with underwriters and get loans processed. 7. We now have less than 40 business days before the September 27th deadline to take advantage of the SBA principal and interest payment benefit so loans not currently in process will likely not meet that deadline. 8. Banks want collateral in the form of equity in real estate. 9. Banks are looking for more post-closing liquidity. 10. Banks are looking for industry experience. 11. Banks are looking MORE at the 5 C's: Collateral, Credit, Capacity, Character, and Cash. 12. The strength of a buyer from a financial perspective is really important right now.