Banks Ease Lending Standards Regardless of Regulations
With demand for financing still at an all-time high, a finite pool of lending opportunities, low interest rates, intense competition, slow growth and increased governmental regulation, banks are feeling the pressure to increase revenue in today’s current economic climate. According to the report, the increased risk taking comes as banks continue struggling to generate strong profits in the aftermath of the 2008 financial crisis. The industry’s overall net income set a record in 2013, rising 12% from a year earlier to almost $108 billion. The previous record was in 2006, and the fact it took the industry seven years to top that reflects “the weak nature of the banking recovery so far”.
Current regulation, brought about by the Dodd-Frank legislation, which capped the amount of commissions and fees banks can charge for originating loans have seemed to create a scenario where banks are now taking on higher risk loans in order to compete and make a profit in this new era of extreme banking regulations. It is clear that if congress had truly understood the marketplace, they would not have produced the income problems which Dodd-Frank has unfortunately created.
Capstone Business Funding, LLC understands the concerns of commercial borrowers who are considering bank financing. Accordingly, we offer various business finance options, including “Single Invoice Factoring” which functions as a safer alternative to traditional, and often times unpredictable, bank financing. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Business Funding.