Momentum in the Small-Balance CRE Space Driven by Technology

Change is Happening

Coming out of the pandemic, there are some significant changes happening in the lending space. Overall, the commercial real estate market is experiencing a slowdown. However, some lenders are gravitating to commercial real estate that is available at lower price points, like small-balance CRE. Markedly, this sector of the market is an attractive option for diversification. 

In response to demand, companies are leveraging new technology to make the purchasing process more accessible and efficient. For example, GoDocs is using its lending automation software and LOS integrations to accelerate loan documentation and drive growth. Lenders are able to manage a much higher volume of loans while still ensuring complete compliance in all 50 states. Ultimately, automating laborious processes that typically require an expensive legal team is saving everyone time and money.

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Download a detailed walk-through with this Infographic. View other areas of growth within CRE multifamily housing to potentially offset interest rate increases.

Leveraging Excess Capital with Efficiency Via Technology

TIAA Bank is just one lender that is focusing on small-balance CRE loans of $2-$5 million. In the first half of 2022, small-balance loans accounted for a quarter of their total loan volume. Beginning in June TIAA launched a new program to focus on small-balance loans specifically. According to Ellen Comeaux, Senior VP at TIAA, they have seen some traditional lenders shifting towards larger balance loans in order to leverage excess capital with more efficiency. Furthermore, Comeaux stated, this shift has “driven lenders still desiring to compete in the small balance space to invest in technology, enabling more efficient onboarding of such loans.” This shift is being made possible with the help of new technology and companies like GoDocs. GoDocs technology enables a more efficient onboarding of these types of loans. 

A Scalable Technology Solution

GoDocs’ automation technology is able to close loans faster and accelerate the loan documentation generation process by more than 1280%. At the same time, the technology is backed by the sharpest legal minds in CRE so that the documents aren’t just created quickly, but are complete, compliant, and accurate. Employees don’t have to be bogged down with data entry, which often involves duplicating entries across multiple systems. Everything is automated so that lenders can make better use of their resources. This scalable solution is allowing lenders to increase loan volume by over 900% and capitalize on this area of growth within commercial real estate.

A Digital Transformation Case Study

Leveraging digital lending technologies to accelerate growth and leapfrog the competition in the private lending market.

Digital Transformation Initiatives

According to GoDocs CEO, Steve Butler, digital transformation is no longer a trend but the status quo at many financial institutions today. “At GoDocs, we are seeing a lot of banks, credit unions, and private lenders in the commercial lending space include a digital transformation initiative in their strategic planning,” Butler says. “We’re seeing new titles like ‘Head of Digital Transformation’ or ‘Vice President, Digital Banking and Transformation.’ This signals that digital transformation is here to stay, and that we’re positioned to have a lasting impact.”

In recent months, inflation has also had an effect on commercial real estate and some lenders have seen a decline in loan volume. For lenders who aren’t performing as well in the competitive small-balance CRE loan segment, one solution is to cut costs and technology is making this a viable option. Lenders can use automation technology to eliminate expensive attorney fees and create a more agile approach that will carry them into the future and make their business more resilient as the market continues to evolve.

Schedule a custom demo to learn more about GoDocs’ digital solution for commercial loans, including Bridge Loans.

Gaining Traction

What of traditional lenders who are shifting towards larger balance loans? Accordingly, GoDocs expects to gain traction from customers like TIAA launching new programs that focus on small balance loans. With industry leaders such as Comeaux citing the high relevance of automation software like GoDocs, the company also expects to attract new business from lenders desiring to compete and gain a new, technological edge. 

Powering Lender Growth
Doc Gen Automation for Loans of Any Size

While small-balance CRE loans become an increasingly popular point of focus for lenders and investors looking for commercial real estate with lower price points, the GoDocs loan document automation system supports this segment but doesn’t stop there. Their one-of-a-kind SaaS application not only automates small-balance loans but specializes in loans of any size — including mid-market and large cap.

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