As we begin 2018, the IFS team pauses to reflect upon our many successes achieved, and the challenges we have overcome over the past nine years. More importantly, we take the time to thank our valued customers for the opportunity to be of service, and are grateful for the many fine business relationships we have established since our inception.
Based on the current economic, political and lending environment, we at IFS expect 2018 to be rewarding and challenging for all lenders and borrowers. The U.S. economy appears to be well-positioned for continued improvement as a result of the newly approved Tax Reform Act, anticipated changes to healthcare costs, continued low inflation, and an increasing (but still low) interest-rate environment.
Additionally, for Qualified Business borrowers, access to financing has broadened as financial institutions and the credit markets across the U.S. have healed from the paralyzing effects of the financial crisis. Accordingly, we expect the lending environment to continue to be robust, but remain very competitive especially within the middle-market, C&I and CRE segments – where continued pressure on net interest margin and ROE is likely to remain in place. We also believe SBA lending will continue to be a strong and stable lending segment. Participating lenders can expect to benefit from superior interest-rate spreads and incremental non-interest income generated through the sale of the guaranteed portion of loans to a very active secondary market, bolstering both liquidity and profitability.
For those financial institutions considering SBA lending in 2018, there is no time like the present!
Believe it or not, ALL federal and state chartered financial institutions are eligible to participate in the SBA 7(a) Guaranteed Loan Program. The approval process involves very little paperwork and takes less than a month to complete. With the assistance of an expert consultant (a Lender Service Provider, or LSP), lenders will find the SBA waters much easier to navigate moving forward. LSPs serve the market by providing lenders the required expertise, resources and support necessary to: (a) qualify, (b) process, and (c) approve each SBA loan request. Through a strategic alliance with a LSP, lenders can avoid the significant and costly financial investment required to build and staff a new lending department – where fixed costs and additional overhead may be difficult to consistently cover due to fluctuating and uncertain loan demand.
In summary, for those lending institutions striving to add safe, sound, secure, and profitable new loans to their commercial loan portfolios in 2018, utilization of the SBA 7(a) and Express Loan Programs will continue to pave the way.
We are looking forward to working with all our business partners in 2018! Happy New Year!