As we move further into 2026, the commercial lending landscape continues to evolve.  Lenders are operating with disciplined underwriting standards, borrowers are more strategic and capital continues to flow, but with greater selectivity. For business owners and investors, preparation and timing matter more than ever.

In recent years, interest rate volatility and economic uncertainty have reshaped how commercial lenders assess risk. While the Prime Rate has stabilized after a rapid increase in the post-COVID years, underwriting remains largely conservative. Debt service coverage ratios (DSCR), liquidity, industry experience, and guarantor strength are all receiving heightened scrutiny. So what does this mean for the borrower? It means lenders and loan committees are taking a comprehensive view of every opportunity, evaluating the full story behind the deal, not just a single metric or strength in insolation.

All of this is unfolding while banks continue to manage regulatory oversight, loan concentrations, and overall balance sheet efficiency. These are every day realities for community bankers, but they also become talking points for alternative lenders, private credit funds, or other non-bank entities attempting to gain market share.

Borrowers should proceed thoughtfully. While these outlets may offer speed or flexibility, they often come with trade-offs, like higher interest rates, more complex structures, and in many cases, a more transactional (and less relationship-driven) experience. That’s a deeper conversation for another day.

The key takeaway: capital is available. Well-prepared borrowers, who work closely with their lender and present a clearly structured, well-documented loan package, position themselves for stronger outcomes with their community bank.

Items to include are the following:

1. Strong Financial Reporting – Current tax returns (business and personal), personal financial statement, interim business financial information, accounts receivable agings, accounts payable agings, rent rolls, projections, etc.
2. Liquidity Reserves – Demonstrating post-closing liquidity.
3. Market Valuations – Asset prices that align with market conditions, cap rates, etc.
4. Early Engagement – Discuss the deal with your community bank lender 90-120 days before loan maturity or acquisition, if possible.

A solid loan package that is complete with all necessary information will reduce friction during the loan review process. And friction can cost time and money!

Remember the earlier mention of diminished level of service? That’s often the reality borrowers encounter with online lenders or private money outlets. Speed and convenience can come at the expense of accessibility and long-term support.

One thing every borrower should keep in mind: relationships matter. In commercial banking, they carry real weight. Those relationships are built and strengthened through partnership with a community banker. Starting a loan file as a new borrower can feel overwhelming, especially depending on the size and complexity of the request. Once that first transaction is successfully completed, your lender is better positioned to support you efficiently as future needs arise.

Lenders value transparent communication and borrowers with a proven track record. That foundation becomes especially important in uncertain markets, when economic conditions create challenges for the borrower.

While we are unlikely to see a return to the ultra-low rate environment of 2020-2021 when the Prime Rate bottomed out at 3.25%, the current market rewards disciplined operators. As your community bank lender, John Lockie, Senior Vice President – Commercial Lending, is ready to answer your questions and support both the immediate needs and long term growth of your company. With nearly 40 years in banking, John has evolved from Credit Analyst to Senior Vice President of Commercial Lending and he brings deep industry knowledge, steady leadership, and a forward-thinking approach to commercial banking and relationship development.

About First Community Bank and Trust
First Community Bank and Trust is a privately-owned bank. Established in 1916 First Community Bank and Trust has been serving Beecher, IL, Peotone, IL and the surrounding communities for over 109 years. Our commitment to providing the best banking products and services is matched only by our outstanding customer service. We offer traditional community banking services, including mortgage, consumer, and commercial lending, as well as state of the art electronic banking services.

Press Contact:
Steve Koehn, Senior Vice President
First Community Bank and Trust
(708) 946-2246

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