Commercial Loans Blog

Commercial Loan Demand is Seasonal

Posted by George Blackburne on Mon, Apr 6, 2015

SpringCommercial loan demand is both seasonal and predictable.   Busy Season for commercial loan originators starts around September 15th and ends by late November.  Forty percent of all of the commercial loans closed by Blackburne & Sons each year are originated during the brief two months of Busy Season.  This is why we have a two-month stretch, like retailers during Christmas Season, during which vacations are prohibited.

Why does the commercial loan business have a Busy Season?  By the middle of September, summer vacations for the family are over, and the kids are back to school.  It's then time to get down to business.  Commercial real estate investors have balloon payments to refinance and more expensive commercial-investment properties to acquire, if for no other reason than the need for more tax shelter.

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The second busiest time for commercial loan demand begins around the third week in January, and this brisk period continues for the next 70 days or so.  Why then?  Christmas Season is over, the family has gone home, and the Christmas decorations have all been boxed and packed away.  Its once again time to get down to business.  Commercial real estate investors need money to pay their income taxes, to expand their own businesses, or to buy other properties.  They can often get at some cash by refinancing their existing commercial buildings.




Commercial loan demand also has its Slow Season.  For commercial loan originators the pickings get pretty slim beginning around April 1st.  This lasts for about 40 days.  Why is commercial loan demand so weak during Slow Season?  The weather turns beautiful in April, and who wants to mess around with reams of paperwork when the sun is shining and the birds are singing?

This brings us to the point of today's training lesson.  There will be predictable times in the commercial mortgage business when commercial loan demand is going to be really, really slow.  You certainly don't want to just sit there twirling your thumbs.  A commercial loan officer can only process so many commercial real estate loans per year, if for no other reason other than he runs out of working hours.  If you let precious working hours slip away, you can never get them back.  That income-generating potential is lost forever.  So what's a boy to do?




This is why I am a huge fan of list advertising.  I started out 35 years ago sending out by snail mail thousands of newsletters printed on legal-sized sheets of copier paper.  My newsletters were simple and basic, but they worked pretty well.  Then I moved on to fax broadcasts, which worked cheaply and effectively for ten years.  Today I use fun email newsletters, complete with lots of jokes, funny pics, interesting videos, and training lessons in commercial real estate finance (CREF).  Maybe in the future I'll move on to video emails or talking avatars.  Who knows?

But my point is that I will probably always be a big proponent of list advertising.  By amassing a big list of buddies and contacts, I have a tool I can use to adjust the volume of my incoming loan applications.  When I'm buried, I can stop sending out newsletters for a few weeks.   When business slows down, I can double the frequency of my newsletters.  This way I can always keep our loan officers busy, without totally burning them out.

"But George, I don't have a marketing list."  Then use the next few weeks - they are going to be slow - to start building your list of contacts.  It's a slow process.  I almost never throw strangers on my list.  I only add those guys or ladies whom I meet in the regular course of business.  They either visit our website, write to me, or call into our office for a commercial loan.  But once I meet a good contact - you, for example - I try to maintain that friendship for the rest of our mutual careers.  There are several hundreds guys on our newsletter lists who have been my business buddies for over 30 years!

Doubling your newsletter volume doesn't always work.  Twenty-five years ago I remember calling my personal mentor - Bill Owens of Owens Financial Group - and complaining about the market being incredibly slow.  Bill is a huge fan of deep sea fishing, and I remember him saying, "Sometimes, George, all you can do is to go fishing."

Once again, thank you in advance for any social media atta-boys you can throw me, like Facebook Shares, Twitter Re-Tweets, Linked In Shares, and Google Plus-Ones.  Got any employees or industry buddies who might enjoy this training lesson?


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Are you the employee or friend who was just forwarded this article?  (Thank you to the sender!)  About five years ago I started writing this blog to train my two wonderful sons in commercial real estate finance.  I was afraid I might suddenly keel over from my bad heart.  Suprisingly, I'm still kicking, but twice a week I still try to write another training article about commercial real estate finance for my sons and good friends.  It's free training in a very lucrative field.  Why not subscribe?


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Topics: marketing for commercial loans