The 2022 AAPL conference in Las Vegas has plenty to offer the small private lender.

When new or small private lenders attend one of our industry events, we expect the event to check the right boxes and be a personal and professional success. We look for great food, plentiful networking, an engaging venue, and generous opportunities to learn and improve our craft. For small businesses, time is short and large company expense accounts don’t exist. So, a productive conference experience is critical to whether we return the next year.

Unfortunately, for many of us, our expectations never quite meet reality. Based on my experience attending conferences and talking with other small lenders, our take-ways include event vendors who aren’t really interested in our businesses because of our small revenue size. In addition, panel discussions and speaker presentations that contemplate various Wall Street funding strategies are interesting but elusive for smaller private lenders.

Welcoming Our Voice

It’s understandable and certainly justifiable that the private lending industry and their events have typically targeted the medium and large lenders, because they dominate the space and are often at the forefront of change. But clearly as our industry evolves, there is a need for another voice at the table, beyond the high rollers and the big whales.

That voice is the small lender, often classified as an owner with a loan portfolio below $25 million.

Many of these owners took a nontraditional path into the business and didn’t come from Wall Street, big banks, or the legal profession. Instead, they started their careers in the mortgage industry, commercial banking, commercial finance, loan brokering, or construction. I began my own journey into private lending as a part-time lender for 15 years while I worked in the factoring business. I transitioned to lending full-time three years ago by starting my own business.

A Conference That “Gets” Small Lenders

There is no shortage of unique challenges for the small lender. Finding valuable education resources and insightful information from outside sources is one of them.

Fortunately, there’s an industry conference that “gets” small lenders. The upcoming American Association of Private Lenders’ annual conference will offer hot topics with takeaways for even the smallest lenders.

Panelists will be delivering nuggets of insight that will apply to lenders at different stages or sizes of business in order to be inclusive of everyone in the audience. Although 100% of the subject matter in each panel won’t be 100% applicable to everyone, most lenders should be able to walk away having learned enough of value to make attendance worthwhile.

Sneak Preview of Topics

Here are some of the sessions you can expect on the topics important to small lenders.

Funding and capitalization. One important session, called “Find the Best Liquidity Strategy for Your Lending Business Goals,” will offer a candid discussion on the many capital sourcing, funding, equity, and liquidity strategies, including when and how they are best executed among different lender sizes and economic climates.

Many small lenders started their business with personal capital, possibly adding friends and family money along the way. Returns have been good, but limited funds make growth challenging. Knowing what other options we have for future funding can mean the difference between expansion or stagnation.

Structuring, underwriting, and closing loans. The AAPL conference will offer several sessions on this topic, including:

• Origination Processes and Procedures for Today’s Private Lender
• Reverse Engineer Your Workflows for Better Lending Operations
• New Trends Among Popular Asset Classes

There are many aspects to structuring a loan, with the borrower or broker conversation always getting to price. Competition for business is fierce and although price has importance in the transaction, small lenders will tell you that a good borrower often values other parts of the loan structure more importantly. Relationship, speed to close, execution, and lender competency will move to the forefront in the small lender transactions. To the borrower, having a lender that can move fast, knows how to close a deal, and brings competence and knowledge to the loan process as a funding partner is invaluable and worth much more than saving a couple points.

Every lender underwrites a little differently and best practices ultimately come with experience. The loan approval box evolves over time but what doesn’t change is the importance of the real estate collateral.

The list of topics small lenders can benefit from when structuring, underwriting, and closing loans is long. The three sessions the AAPL conference offers should provide some valuable takeaways.

Loan servicing and risk management. Using a third-party loan servicer instead of managing client payments, filings, and pay-offs in-house can offer advantages in time and expense while bringing an extra level of oversight. Losing some control over account management is the trade-off. There are various loan servicers of different sizes and locations a private lender can choose from. In-house loan monitoring, depending on portfolio size, also may require some industry-specific software to maintain adequate efficiency.

Other risk management topics to consider include property insurance, taxes, and non-payment of interest/foreclosure strategies. Don’t always count on insurance companies to notify the lender of client payment defaults and policy expirations. Internal safeguards should be put in place to manage this risk. Monitoring borrower property tax payments can be critical if you don’t escrow. Tax liens, should they arise, have different implications depending on the location of your collateral. Finally, if you need to foreclose, find an experienced attorney that specializes in this area to guide you through the process and pitfalls.

The AAPL conference offers two sessions on these important topics:

• Best Practices for Managing & Servicing Your Loan Portfolio
• Everything Default, Loss Mitigation, & REO Troubleshooting

A Call to Action

As our industry continues to evolve, so too should the representation of lenders that have a voice in its future. The American Association of Private Lenders listened and has chosen to give the small private lender, of which there are many throughout the country, a collective seat at the big table.

No matter what size your business, we should all be pleased the foundation is being built to recognize the importance of all lenders and the development of content for small lenders is now emerging. While still on the ground floor of these changes, there should be legitimate excitement that a big bet has been placed on this community. Inclusivity, additional diversity, and collective insights will only further all our goals and make the private lending industry stronger.

Expect a full house at the annual AAPL conference this year. It’s going to be all aces.

See you in Vegas!