Los Angeles, CA (PRWEB) May 26, 2014

Commercial lending services have a buyer power score of 3.5 out of 5. ?This score reflects that buyers have a moderate amount of negotiating power due to the high number of suppliers, the moderate availability of substitutes and the recent decrease in prices,? says IBISWorld procurement analyst Caitlin Newsom. There are almost 6,000 banks in the United States, creating heavy competition among suppliers. Major suppliers include Bank of America and Citigroup Inc. This competition forces banks to be more willing to negotiate prices to gain market share, boosting buyer power. Additionally, there are a number of alternative lending options for businesses besides a bank loan. A buyer can enter into a loan agreement with a credit union or borrow funds from a private equity firm, cash-flow lender or a merchant cash advance lender. Due to the existence of alternative suppliers from which to borrow funds, banks are more willing to negotiate a lower price for commercial lending services. However, the boost in buyer power is slightly constrained because these alternative lenders typically charge much higher interest rates for business loans.

The average price of commercial lending services has been falling over the past three years, helping to boost buyer power. Prices have been declining because banks have had an oversupply of funds to lend and limited demand from qualified businesses. ?While the overall number of businesses has been rising over the past three years, businesses are still experiencing high levels of risk,? says Newsom. Banks severely reduced their lending to small businesses due to the higher level of default risk. Instead, banks have been targeting large, mature businesses that are financially stable. Due to the limited pool of these large, stable businesses, banks have been lowering interest rates to attract these businesses.

However, buyer power is hampered due to the expected increase in prices over the next three years. The Federal Open Market Committee is expected to increase the federal funds rate, which is the rate at which banks borrow funds held at the Federal Reserve, increasing banks’ costs for supplying loans. Banks are expected to increase the price of their loans to offset the rising cost of borrowing and to protect profit margins.

For more information, visit IBISWorld?s Commercial Lending Services procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of commercial lending services. Commercial lending services include various types of loans made from commercial banks to businesses. This report does not cover commercial real estate loans.

Executive Summary

Pricing Environment

Price Fundamentals

Benchmark Price

Pricing Model

Price Drivers

Recent Price Trend

Price Forecast

Product Characteristics

Product Life Cycle

Total Cost of Ownership

Product Specialization

Substitute Goods


Quality Control

Supply Chain & Vendors

Supply Chain Dynamics

Supply Chain Risk


Competitive Environment

Market Share Concentration

Market Profitability

Switching Costs

Purchasing Process

Buying Basics

Buying Lead Time

Selection Process

Key RFP Elements

Negotiation Questions

Buyer Power Factors

Key Statistics

About IBISWorld Inc.

IBISWorld is one of the world’s leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld?s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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