Commercial Lending Boom: Why Investors and Non-Banks Are Flooding the Market in 2025

The commercial lending landscape has undergone a dramatic transformation in 2025, creating unprecedented opportunities for savvy business owners and investors. With U.S. commercial lending activity forecasted to reach $1.2 trillion this year: and major institutions like JPMorgan Chase anticipating 15% more loan originations compared to 2024: you're witnessing one of the most significant shifts in business financing history.

This boom isn't just about numbers; it's about a fundamental restructuring of how capital flows to businesses, and understanding these changes can be the difference between thriving and merely surviving in today's competitive market.

The Numbers Tell an Extraordinary Story

Commercial and multifamily mortgage loan originations jumped an impressive 66% in Q2 2025 compared to the same period last year. The CBRE Lending Momentum Index surged 13% quarter-over-quarter and an astounding 90% year-over-year in Q1 2025, driven by higher financing volumes and robust banking activity.

These aren't just statistics: they represent real opportunities for your business to access capital that was previously difficult or expensive to obtain. When lending activity increases this dramatically, competition among lenders intensifies, which typically translates to better terms and more flexible requirements for borrowers.

Interest Rate Stabilization: The Game Changer

The primary catalyst behind this lending explosion has been the stabilization of interest rates. After years of volatility, the prime rate: the benchmark for commercial loans: has remained steady and even declined by 1% over the past year. Long-term DSCR (Debt Service Coverage Ratio) loan rates have dropped from 8.73% in January 2024 to 7.76% in February 2025.

For your business, this means:

• Lower borrowing costs: Reduced rates translate directly to lower monthly payments and improved cash flow

• Deal viability: Projects that weren't financially feasible at higher rates are now profitable

• Refinancing opportunities: If you have existing loans, refinancing could significantly reduce your debt service

The Federal Reserve's rate-cutting cycle and narrowing lender spreads: which compressed from over 200 basis points in 2023 and early 2024: have created an environment where accessing capital is not only easier but more affordable.

The Rise of Non-Bank Lenders: Your New Best Friends

Perhaps the most significant structural change reshaping commercial lending is the dramatic rise of non-bank lenders. Traditional banks now account for only 31% of the lender pool, down from 44% in 2022. This shift represents a massive opportunity for business owners who may have been turned away by traditional banking requirements.

Why Non-Bank Lenders Are Winning

Non-bank lenders offer several advantages over traditional banks:

1. Flexibility in underwriting: They can lend to higher loan-to-value ratios and underwrite based on future asset performance rather than relying solely on historical metrics

2. Speed of execution: Without the bureaucratic layers of large banks, decisions happen faster

3. Specialized expertise: Many focus on specific sectors, providing deeper industry knowledge

4. Higher risk tolerance: They're willing to finance deals that banks consider too risky

In Q4 2024, life companies became the second most active lending group after banks, accounting for 33% of non-agency loan closings, followed by debt funds and mortgage REITs with a 23% share.

Banks Are Retreating: Here's What That Means for You

Traditional banks are intentionally limiting their exposure to commercial real estate loans through various strategies, including hedging via Synthetic Risk Transfers (SRTs) and selling off loan blocks. While this might seem concerning, it's actually creating opportunities for businesses willing to work with alternative lenders.

This retreat means:

• Less competition from other borrowers seeking traditional bank financing

• More negotiating power with non-bank lenders who are eager for quality deals

• Access to more creative financing structures that banks wouldn't consider

The $957 Billion Refinancing Wave

One of the most significant opportunities in 2025 comes from the massive refinancing wave. Approximately $957 billion: 20% of the $4.8 trillion in outstanding commercial mortgages: comes due this year. This creates a perfect storm of opportunity for both property owners and new investors.

Refinancing activity is particularly robust, accounting for 72% of year-to-date loan originations: the highest share since 2000. If you own commercial property, this environment provides exceptional opportunities to:

• Reduce your interest rates through refinancing

• Access additional capital through cash-out refinancing

• Improve loan terms and extend maturities

Abundant Capital Seeking Opportunities

Dry powder targeting commercial real estate is near record levels, with debt funds alone holding approximately $40 billion ready to deploy. This abundance of capital creates a borrower-friendly market where lenders are competing aggressively for quality deals.

For business owners, this translates to:

• More lender options to choose from

• Better terms and rates due to competition

• Faster approval processes as lenders seek to deploy capital quickly

How to Capitalize on This Lending Boom

Understanding these trends is only valuable if you can act on them. Here's your strategic action plan:

1. Evaluate Your Current Financing

Review your existing loans and credit facilities. With rates declining and competition increasing, you may be able to refinance at significantly better terms. Calculate potential savings from refinancing and factor in closing costs to determine if it makes financial sense.

2. Explore Non-Bank Options

Don't limit yourself to traditional banks. Research alternative lenders who specialize in your industry or property type. Many offer more flexible terms and faster processing times than traditional institutions.

3. Prepare for Growth

With capital more accessible, now is an excellent time to plan expansion or acquisition strategies. Develop a clear business plan that demonstrates how additional capital will generate returns.

4. Understand Your Options

Familiarize yourself with different lending structures. DSCR loans, bridge financing, and alternative lending products may offer advantages over traditional term loans depending on your situation.

The Competitive Landscape Works in Your Favor

The combination of abundant capital, lower rates, and increased lender competition has created a highly favorable environment for borrowers. Lenders are shifting their underwriting focus toward property-level metrics like loan-to-value ratios and debt-service coverage ratios rather than relying solely on traditional criteria.

This shift means that even if your business doesn't fit the perfect traditional lending profile, you may still qualify for competitive financing through alternative channels.

Looking Ahead: Sustained Momentum

Industry experts expect this momentum in debt capital markets to continue through the second half of 2025. However, capital is flowing primarily toward high-quality, low-risk deals, making it crucial to position your business and projects appropriately.

Key considerations for the remainder of 2025:

• Quality matters: Lenders remain focused on strong fundamentals and clear repayment ability

• Speed is essential: With competition for the best deals intensifying, quick decision-making provides competitive advantages

• Professional guidance pays off: Working with experienced financing professionals can help you navigate the complex landscape of lending options

Your Next Steps

The commercial lending boom of 2025 represents a generational opportunity for business growth and wealth building. Whether you're looking to expand operations, acquire properties, or refinance existing debt, the current market conditions are exceptionally favorable.

Don't let this opportunity pass by. The combination of lower rates, abundant capital, and competitive lenders creates a perfect storm for business owners ready to act. Contact Capco Capital LLC to explore how you can leverage these market conditions to achieve your business and wealth-building objectives.

The lending boom is here, and it's transforming how businesses access capital. Position yourself to take advantage of these unprecedented opportunities, and you'll be well on your way to building the wealth and business success you've been working toward.

By Van Gothreaux