Small balance lending demand has taken off. Sabal Capital Partners is a leader in this space, working with Freddie Mac's small balance loan program, which focuses on workforce housing. To keep up with the strong demand for small balance loan, defined as loans with a value of $1 million to $7.5 million, Sabal has adopted technology to create efficiencies, and it has become a cornerstone of the firm's business. We sat down with Pat Jackson, CEO of Sabal Capital Partners to talk about the demand for small balance loans and how the firm is leveraging technology to support the high demand.
GlobeSt.com: What has demand been like this year for small balance lending, and why?
Pat Jackson: Demand for commercial small balance loans has been exceptionally high year-to-date, following high volume in 2017, as well. There is currently a real need for acquisition and refinance debt in the $1 million to $7.5 million range, specifically for multifamily properties. Many of these properties are workforce housing located in, or near, major metropolitan regions where employment is strong, populations are high, for sale homes are expensive and many are simply priced out. Freddie Mac's Small Balance (SBL) Program, which Sabal is a major lender partner to, is designed to provide finance that will ultimately keep these properties in play and affordable for America's workers.
GlobeSt.com: How has technology changed the small balance lending market, and how has it helped you to close a higher number of deals?
Jackson: Technology is the cornerstone of our platform and has been a paramount contributor to our success from the start. We designed our proprietary SNAP technology platform to drive unparalleled efficiency throughout the lending process. Key automation has allowed us to eliminate cumbersome, old school paper processes and to improve communication between us and our valued broker partners. The technology also enhances our credit decisions, helping us to ensure we fund the right transactions. All of these tech advancements combined enable incredible speed to close, which is extremely valuable to our borrowers.
GlobeSt.com: Have you seen other players in this market begin to adopt more technology?
Jackson: We believe that when Sabal launched SNAP, we were the first in the SBL marketplace to deliver an advanced tech platform and, in doing so, disrupted the sector altogether. Since then, we have seen competitors introduce technology, to varying degrees, into their operations and, in certain cases, even try to get their hands on our own system presumably to try and replicate it. However, we continue to develop and introduce improvements and additions to SNAPÔ to ensure we remain ahead of the curve at all times.
GlobeSt.com: Are there new technologies coming that will disrupt this market?
Jackson: A lot of the tech advancements in the small balance sector have thus far focused on introducing and improving automation in the loan application and servicing areas. Expect to see technology applied to other areas such as toward the improved assessment of risk in underwriting. With commercial loans, large data sets must be analyzed to assess risk. Technology is particularly adept at finding variations in the data that might indicate areas of concern for the lender. While human experts are still needed and are here to stay, technology can help them find these deviations much faster and then decide more accurately how best to handle them.
GlobeSt.com: How do you expect small balance activity this year to compare to activity last year?
Jackson: Demand has significantly increased three years running and we have no reason to believe that this year won't continue this trend. With workforce housing in high demand, the debt on these multifamily properties will be as well.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kelsi Maree Borland
