bank retreat – After Silicon Valley Bank’s collapse pushed regional lenders to tighten conditions, commercial mortgage brokers and private lenders moved in to fill the gap—an opening Builders Capital’s CEO says homebuilders now see as urgent.
When Silicon Valley Bank collapsed, the tremor didn’t stay in Silicon Valley. It spread into construction finance—right where builders depend on steady lending and where one tightened credit line can change a project’s entire timetable.
Robert Trent, the CEO of Builders Capital in Washington state, describes a retreat that has become visible in the terms private lenders are now being asked to provide. He says regional lenders tightened deposit requirements, reduced facility sizes, and lowered leverage as the pullback accelerated.
Trent now runs a private lender working to fill the space left behind. “The banks are really retreating from the space,” he told Mortgage Professional America. “They’re decreasing leverage they’re offering to homebuilders. they are increasing deposit requirements. they’re decreasing the size of the facilities they have. And essentially. the homebuilders are scared or concerned that the banks aren’t going to continue to be there in a meaningful way for them to capitalize their homebuilding needs.”.
The shift didn’t begin with one headline, Trent said. He framed it as a reversal in how capital flows between banks and private lenders in the construction space.
“We used to be an overflow — their primary source of capital was the banks, and we were an overflow as a private lender to them,” Trent said. “The inverse is now happening where they’re asking for us to finance a lot more and have the banks as their overflow or backup plan.”
Taken together. those changes—from deposit requirements to smaller facilities to lower leverage—explain why brokers and private lenders see opportunity where builders once relied mostly on banks. In Trent’s telling, builders aren’t just shopping for different terms. They’re recalibrating who they trust to carry deals through construction.
Silicon Valley Bank construction lending private lenders mortgage brokers deposit requirements leverage facility sizes Builders Capital Robert Trent
So banks pulled out and now builders are stuck? Love that.
I’m confused, didn’t SVB only affect tech stuff? But apparently it snowballed into mortgages or whatever. Sounds like builders are just getting squeezed from all sides.
“Deposit requirements” sounds like banks wanting people to put more money down… which is backwards, right? If homebuilders are scared then isn’t this gonna hit home prices anyway? Also private lenders “fill the gap” but they probably charge more so idk.
This reads like banks are just being like “nah we’re done” after SVB, but then suddenly brokers are like yay opportunity. I don’t really get the “overflow/backup plan” thing—like are private lenders financing the same deals at the same rates? Because if the leverage is lower and the facility sizes are smaller, that seems worse for anybody trying to start construction. Feels like every time one bank collapses it turns into a whole new rigged system with different players but the same outcome.