Commercial Lending Trends: What to Watch in 2024

The world of commercial lending is moving at the speed of light – and it shows no signs of slowing down in 2024. In fact, this year may define the commercial lending landscape for years to come. The following trends can give business owners an idea of what to expect when securing financing this year.

More options: In an era defined by narrowing profit margins and stiff competition, this trend can benefit small and medium-sized businesses. In the past, securing a commercial loan was completed by working with a local bank and completing an application. Today, companies have a plethora of lending options, including banks and credit unions, nonprofit organizations, government agencies, venture capital, and online fintech companies. With so many options, business owners can shop around for a loan that gives them the most favorable terms and flexibility they need to accomplish their business goals.
Digital convenience: Many lenders are opting to close local branches in favor of providing services online. Digital lending procedures are only the beginning. New lending and business support systems include P2P lending, DAOs, and others. The reality is that in addition to having more options, businesses have more convenient options. They can apply for lending from many different organizations by completing applications online from the convenience of any location. In an era when business moves quickly, this convenience and immediacy can give you a strong advantage over the competition.
Artificial intelligence: There is no doubt that artificial intelligence is now advanced enough that it is pervasive in almost every industry today, including finance. While it has been adopted to a greater or lesser extent depending upon the company, most lenders now use AI and predictive analytics in some form to assess risk and make decisions about lending. Another area where AI may play an increasing role is loan monitoring. AI tools can monitor macroeconomic trends and monitor the finances of loanholders. If a specific loan appears to be in jeopardy, the lender can reach out to the company and work with them to prevent a default. This type of structure is beneficial for the lender and the borrower. As AI applications continue to become more refined and sophisticated, we can expect that they will become more prevalent with many lenders, including traditional lenders like banks and emerging lenders, such as fintech companies.
Cybersecurity emphasis: Cybersecurity concerns have been growing for decades. And while it may be tempting to think that your small business can fly under the radar, the majority of cybercrimes target small companies simply because they can’t afford enterprise-level security measures. With the influx of digital lending options, business owners must be very wary when submitting applications and providing financial data to anyone. It will be essential to do your homework and vet any site to ensure it’s legitimate before proceeding with attempts to secure commercial loans.
Sustainable lending: As consumers become more savvy about the broader impact of their actions, there is a strong preference for patronizing companies that demonstrate a commitment to sustainability and ethical lending. Many companies will be looking at this factor to differentiate the right lender in a sea of options.
Personalized services: Personalized services have been growing for years, and this trend goes hand in hand with artificial intelligence. Lending software that leverages the power of artificial intelligence and machine learning can help lenders and borrowers determine the best options, including by customizing loans and interest rates to fit the situation and needs of any company. With these powerful platforms, lenders can do a deep dive to get information about a borrower’s creditworthiness, financial history, and other relevant information. Ultimately, this technology helps lenders make data-driven lending decisions that can be highly favorable to thriving small businesses. Additionally, these platforms can help develop commercial loan options that meet the unique needs of different businesses. Ultimately, commercial borrowers can benefit from these technologies, leading to better loan options and more favorable terms. As this technology continues to evolve, it will likely play a more pivotal role in commercial lending in the future.
Regulatory challenges: There is no doubt that regulation plays a tremendous role in commercial lending. And with the market turmoil that the pandemic and its after-effects caused, regulation will continue to take center stage at least throughout the year. As technological solutions continue to enter the world of commercial lending, regulatory agencies will try to catch up to the technology.

There can be no doubt that commercial lending will have a big year in 2024. To discuss lending options that are right for your small business, contact Penn Commercial Capital today!

Penn Commercial Capital can help you secure your next round of financing or business loan efficiently and ethically. We’re proud to champion the small businessperson and can finance clients seeking loans from as little as $100,000 up to $100 million.