Commercial loans just like residential loans come up for renewal at the end of a term.
Look at the typical bank strategy. Borrower gets notice of renewal 2 or 3 days before renewal date. Bank offers a range of rates for renewal terms of 1 - 5 years. Borrower doesn't look at alternates he/she could get because there's no time to shop.
Yes. The bank has a strategy. It starts with short notice. The borrower does not get enough time with reminder/renewal letter to go elsewhere. Then bank offers higher rates than would be offered if there was competition. Finally, confuse the borrower with options so the high rates look OK.
Case Study: Commercial borrower offered a 5 year term fixed rate renewal of 4.21%. Alternate lender offers 2.79% for same term.
Imagine the extra cash flow your business could use if it was getting the lower rate. The difference??? Be proactive. Prepare to pay out your commercial loan when due. Call me to discuss your options 604 230-9392
