Latest in bank lending with Robert Cannaday of Great Plains Bank
With the agencies pulling back on smaller loans, community and regional banks have quietly become one of the most important sources of financing for multifamily buyers, especially on deals under $5 million. So what are banks actually lending on right now, what does it take to qualify, and how should you think about recourse and today's wave of loan maturities?
On this episode, Old Capital's James Eng sits down with Robert Cannaday, Market President of Great Plains Bank, for a straight-talk look at bank lending in this market.
Here's what they covered.
Meet Great Plains Bank
Great Plains Bank is a community bank based in Oklahoma City with five locations in Texas. Robert has been in banking since 2011, spending most of the last dozen years in commercial lending for real estate investors, financing buyers to purchase and build investment real estate.
The bank sits at just under $2 billion in assets, a size Robert described as the sweet spot for a community bank. It's big enough to have real lending capacity for its customers, but still small enough to feel like a one or two-branch community bank where relationships matter. They lend across business banking, from commercial real estate investors to business owners and consumers.
2021 versus today: money got more expensive, and that's not all bad
James asked Robert to contrast the loans he was doing in 2020 and 2021 with today, since most people's memory only stretches back a few years.
Back then, Robert said, it was "kind of crazy." The bank was doing all sorts of deals, including a lot of multifamily bridge financing for buyers looking to improve properties and bump rents. Rates were in the high 4s and low 5s, and money was flowing freely. "Everybody was making it," he said.
Today is a different world. Money is more expensive, deals don't pencil as well, and borrowers need more equity and more guarantor strength to make a deal work. But Robert's take on that shift was refreshing.
"It honestly kind of feels better. It feels more stable," he said. "It doesn't feel like everybody that wants to get into investment real estate is getting into it now. It seems more calculated, and I feel like we're making safer bets than we were back in 2020, 2021."
His read on the industry: underwriting standards have tightened to a healthy point. Not so tight that nobody can get a loan, but tight enough that banks and lenders are being smarter than they were.
How bank pricing actually works: it all starts with Prime
One of the most useful parts of the conversation was Robert explaining how a bank prices a loan, because it's very different from agency debt.
"We base all of our interest rates on prime," he said, meaning the Wall Street Journal Prime rate, which was 6.75% at the time of the interview. A clean, straightforward deal, strong property, strong cash flow, strong guarantors, is priced right at Prime. Robert calls that a "prime deal."
From there, price goes up with risk. Add a value-add component, construction, stabilization risk, or a weaker location, and the rate climbs. "Your highest price deal that we are doing these days is Prime Plus two, which has a lot of risk to it," Robert said. So today's range at Great Plains runs from about 6.75% on a spotless deal up to roughly 8.75% on the hairiest ones.
What they're lending on right now
Robert ran through some of the deals the bank has closed this year, and the variety tells you a lot about where opportunity is:
Mixed-use / small multifamily: A Dallas building that needed significant rehab, actually converting the multifamily portion into live-work office space, a pivot away from multifamily.
Retail strip centers: Close to $10 million in retail alone this year, some value-add, some stabilized. "We've been seeing pretty good things in retail for the right operators," he said.
Assisted living: These have been hit hard, and distressed properties are coming up through foreclosures and auctions. Experienced operators are buying them at around half the appraised value of the real estate.
Spec construction: In hot, higher-income single-family markets like Highland Park, Southlake, and Westlake. They avoid the softer DFW single-family construction markets.
Odds and ends: Equipment loans for a moving company, government leasing, single-family fix-and-flips for the right borrowers, and land and lot loans for future builds.
The gap the agencies left
James highlighted a big shift on the agency side. Earlier this year, Freddie Mac's Small Balance Loan (SBL) program was doing non-recourse loans from $1 million up to $7.5 million, with roughly 30-year amortization, a couple years of interest-only, and rates in the high 5s to low 6s while Treasuries were down. Then that program went away.
The result: it's now genuinely difficult to get agency loans under $2 million, and often even under $5 million. That's exactly the space community banks like Great Plains fill.
What it takes to qualify for a sub-$5 million multifamily loan
This is the practical roadmap for a buyer. Robert said $5 million and under is right in the bank's sweet spot, in fact, their average loan size is under $1 million, so they like granular portfolios.
For a $5 million multifamily deal at a prime rate, here's the profile they want to see:
The property: Stabilized, with a 1.25x debt service coverage ratio. Interestingly, occupancy isn't the deciding factor. "If it's at 80% occupied and it can cash flow, great," Robert said, though typically it takes low-90s occupancy to hit that 1.25 coverage.
Guarantor net worth: At least $5 million, roughly equal to the purchase price.
Post-closing liquidity: Well over 10% of the asset value, so around $500,000 in the bank after closing on a $5 million deal.
Outside income: The bank wants guarantors who have income beyond the property, enough to support themselves and provide a cushion. As Robert put it, if the property has a rough year, "we had a lot of stuff break last year and we've got an $80,000 tax bill coming up," it helps to have a guarantor who can simply write that check and keep moving.
How fast can you close?
If you're racing a year-end deadline, banks can move. Robert said Great Plains can close in 30 days if needed, though the average on a larger commercial transaction is about 45 days. The key is getting everything to them up front.
Recourse, explained without the fear
A lot of buyers coming from the non-recourse agency world are nervous about recourse. Robert broke it down in plain terms.
"If the bank takes a loss, the bank expects you to write a check for it," he said. That's really all recourse means.
Here's how it plays out. If you have a lot of equity and you decide to hand the keys back, the bank forecloses and markets the property with local brokers to get top dollar. If they recover their money or break even, "you don't owe us anything, because we didn't take a loss." Only if there's a real deficit do you get a letter asking you to cover the shortfall.
And it can cut in the borrower's favor. Robert mentioned one foreclosure he has in mind that will sell for far more than the bank is owed, meaning the borrower walks away owing nothing. They lose their equity, but the bank isn't coming after them for more.
The maturity wall, and how a bank handles a workout
James pointed to a wave that's hitting the market right now. Back in 2021 and 2022, on larger deals ($20 million and up), bridge lenders often extended loans even when borrowers couldn't hit the 1.25x coverage test the loan agreement required. Now those extensions are running out, the real fifth-year maturity is arriving, and lenders are taking deals back and listing them for sale.
So how does a bank like Great Plains handle a struggling loan at maturity? Property first, Robert said.
"When we renew a deal, we're looking at the property first and foremost. Does the property make sense? If the property is still generating enough cash flow, we're going to renew it. If it's not, that's when we're going to start looking at the guarantors."
He shared a telling example. One property has been "sucking air" for a while and isn't close to cash flowing. But the guarantors stepped up, kept the loan current, and even paid the property taxes out of pocket, and they still have strong balance sheets and income. That deal will likely get renewed for another five years. The borrowers won't get a premium rate, but they'll renew without injecting new cash, keep the property, keep paying down principal and building equity, and be in a great spot when the market recovers. As Robert put it, it's about "weathering the storm."
That's the real argument for banking with a relationship lender: a bank that knows you and believes in your character is far more likely to work with you through a rough patch than a faceless debt fund.
Why a community bank
With thousands of banks out there, what sets Great Plains apart? Robert's answer was speed and common sense.
"A lot of bigger banks have a very strict policy they have to stick to. We don't," he said. "We like to consider ourselves common sense bankers. If the deal makes sense, we'll get it done, and we'll get it done quickly."
He was honest about the tradeoff. "We're never going to be the cheapest, and we're not going to have the longest amortization or the longest interest-only period. But there's certainty in our ability to execute."
In a market where certainty of close has become everything, that's a real advantage.
Key Takeaways
Banks now fill the small-loan gap. With agency programs pulling back under $5 million, community banks are the go-to for smaller multifamily deals.
Bank pricing is Prime-based. A clean deal prices at Prime (6.75%), and risk pushes it up toward Prime Plus 2.
Know the borrower profile. For a sub-$5M loan: a stabilized asset at 1.25x DSCR, guarantor net worth near the purchase price, post-closing liquidity above 10%, and outside income.
Recourse is simpler than it sounds. If the bank takes a loss, you cover it. If they break even at foreclosure, you owe nothing.
Relationships matter at maturity. A bank that trusts strong guarantors will renew and weather the storm, something a debt fund rarely does.
Speed and certainty win. Community banks may not be the cheapest, but they can close in 30 to 45 days and execute.
The bottom line
The easy-money era of 2021 is gone, and Robert's point is that this is actually healthier. Lending is more disciplined, borrowers are more serious, and the banks still writing loans are making safer bets. For buyers chasing deals under $5 million, a relationship-driven community bank may be the most reliable path to the closing table, and to a partner who will stand with you when the market gets bumpy.
Looking at a multifamily deal and weighing your financing options? The Old Capital team can help you find the right structure. Reach out at oldcapitallending.com