The Bank Retreat

Traditional banks have pulled back from commercial real estate lending. If you’re planning to finance a retail acquisition in 2026, you need to understand who’s lending now. The answer: private credit funds and insurance companies.

This isn’t a temporary shift. It’s structural.

Regional banks are reducing their real estate exposure to strengthen balance sheets after the 2023 banking crisis.

Regulators are watching concentrated real estate portfolios more closely than ever. Banks that once competed hard for retail loans are now selective, slow, and conservative.

What Private Credit Actually Costs

Private credit funds and insurance companies have stepped into the gap.

These non-bank lenders are growing originations at double-digit rates.

They’re providing the liquidity that banks no longer offer. By 2026, they’ve become the go-to capital source for many retail transactions.

But this capital comes at a price.

Interest rates typically run 2-4% higher than bank pricing. Expect 8-10% or more for properties in transition.

Loan-to-value ratios are tighter—often 55-60% compared to the 65-70% banks once offered. Loan terms are shorter too, typically 3-5 years with extension options.

Why Borrowers Choose Private Credit Anyway

Despite higher costs, private credit offers real advantages.

Speed. These lenders move faster than banks with streamlined approvals.

Flexibility. They’ll structure deals creatively—mezzanine tranches, preferred equity, custom waterfalls.

Appetite for complexity. They’ll finance properties banks won’t touch: value-add deals, repositioning plays, assets with near-term lease rollover.

The trade-off? Private credit lenders conduct rigorous due diligence. They expect sophisticated sponsors with detailed business plans, granular projections, and proven execution capability.

What You Should Do Now

Accept higher capital costs as the new normal.

Underwrite every deal assuming private credit pricing. If the returns don’t work at these rates, the deal doesn’t work.

Build relationships before you need them.

Meet with funds now. Understand their criteria. Establish credibility before you’re under contract and need financing fast.

Ready to connect with lenders?

We’ll introduce you to private credit funds active in Southern California retail.

Williams Capital Advisors
(213) 880-8107 | francisco.williams@williamscap.ai | williamscapitaladvisors.com