The Future of Commercial Lending in a Changing Landscape
As we look toward the future of commercial lending, there are two major forces that could reshape the industry in profound ways: the increasing adoption of blockchain technology and a potential shift in monetary policy under a second Trump administration. Both of these elements carry significant implications for investors, lenders, and borrowers navigating an already turbulent lending environment.
The Blockchain Revolution in Commercial Lending
Blockchain technology has been a buzzword in finance for years, but its integration into commercial lending has been slow. That could change in the coming years. The core benefits of blockchain—decentralization, transparency, and security—could revolutionize the way loans are originated, underwritten, and serviced. Smart contracts, powered by blockchain, could automate much of the loan origination process, reducing inefficiencies and minimizing human error.
Imagine a future where commercial real estate loans are tokenized, allowing fractional ownership and greater liquidity in the market. Instead of a traditional loan process, where banks act as intermediaries, blockchain-based lending could enable peer-to-peer lending at scale, reducing borrowing costs and increasing accessibility. Moreover, blockchain could improve risk assessment by providing real-time financial data on properties and borrowers, leading to more accurate underwriting.
While this vision may seem futuristic, we are already seeing early adoption. Companies like Figure and Cadence have leveraged blockchain to streamline lending processes, and as institutional adoption grows, we may witness a major shift away from the traditional banking model in commercial real estate.
Trump’s Potential Influence on Lending: “Opening Up Lending”
Former President Donald Trump has made it clear that he sees excessive regulation as a barrier to economic growth. His statements about “opening up lending” suggest that, if re-elected, he could push for a regulatory rollback that incentivizes banks to increase loan issuance. One of the key mechanisms to achieve this could be pressuring the Federal Reserve to lower interest rates, making borrowing cheaper.
Lower rates would be a welcome relief for investors currently burdened by high-cost bridge debt. Many commercial real estate owners who took on short-term loans with the expectation of refinancing at lower rates have found themselves in a liquidity crunch as interest rates have soared. If rates were to drop significantly, refinancing options would expand, potentially rescuing deals that are currently underwater.
Additionally, deregulation could lead to increased risk-taking by banks, reminiscent of the pre-2008 lending environment. While this may spur economic activity in the short term, it could also create new vulnerabilities in the financial system. The question remains: Will increased access to credit lead to sustainable growth, or will it fuel another cycle of over-leverage?
The Impact on Stressed Deals in 2025
For deals that are currently struggling due to high-interest bridge loans, a shift toward lower rates and relaxed lending standards could be a lifeline. Many borrowers who acquired properties at peak valuations are now facing refinancing challenges, as debt service costs have outpaced property income growth.
If lending does indeed open up in 2025, we could see a wave of refinancing activity, potentially preventing widespread defaults. However, lenders will likely remain cautious, particularly in sectors like office real estate, which is still experiencing structural shifts due to remote work trends. The winners in this environment will be investors who have managed to stay liquid, as they will be able to acquire distressed assets at discounted prices and finance them under more favorable terms.
AI's Role in the Future of Lending
Another major force shaping the future of commercial lending is artificial intelligence (AI). AI-driven underwriting can dramatically speed up the loan approval process, reducing decision times from weeks to mere hours. Machine learning algorithms can analyze vast amounts of financial and market data, improving risk assessments and identifying patterns that human underwriters might miss.
Additionally, AI-powered market research tools allow lenders to stay ahead of economic trends, identifying emerging risks and opportunities in real-time. This increased efficiency can lead to more accurate property valuations, smarter lending decisions, and enhanced fraud detection.
With AI handling much of the heavy lifting in underwriting and due diligence, lenders can focus more on strategic growth and relationship-building. As AI adoption accelerates, we could see a future where commercial lending is not only faster and more efficient but also more resilient to economic volatility.
What Does 2026 and Beyond Look Like?
Looking beyond 2025, we could be entering a new era of commercial lending. If blockchain adoption accelerates, we may see a hybrid system where traditional banks coexist with decentralized lending platforms. This could democratize access to capital, allowing smaller investors to compete on a more level playing field with institutional players.
Meanwhile, if a Trump administration or another pro-business leadership continues pushing for deregulation and lower rates, we could see another commercial real estate boom. However, investors should remain cautious—history has shown that periods of easy money often lead to asset bubbles.
By 2026 and beyond, the market could bifurcate. On one hand, technology-driven efficiency could create a more transparent and stable lending environment. On the other hand, looser regulations and aggressive lending could introduce new risks, especially if inflation reaccelerates and forces the Fed to reverse course on rate cuts.
Final Thoughts
The future of commercial lending is at a crossroads. Whether through blockchain’s disruptive potential, AI-driven efficiencies, or the impact of political leadership on interest rates and regulation, major shifts are on the horizon. Investors should stay informed, remain adaptable, and be prepared for both the opportunities and risks that come with these changes.
