Private Lenders Outpace Banks Despite 329 BPS Cost Gap

Speed and Flexibility Drive Borrower Preferences

Borrowers in the US commercial real estate market are choosing private lenders and paying a premium for it, according to Gumption Technologies’ Q2 2026 CRE lending data cited by GlobeSt.com. On Gumption’s marketplace, private debt funds were the source of CRE loans priced at 9.76% on average, far above the 6.47% rate banks, credit unions, and life insurers offered during the same quarter. This 329-basis-point spread means an extra $329,000 in annual costs on a $10M loan. Despite the gap, sponsors consistently opted for private lenders—often experienced CRE operators with conventional term sheets in hand, not just distressed or desperate borrowers.

What explains this willingness to pay more? The answer is faster drawdowns, higher advance rates, and structures banks typically won’t touch. In a South Florida multifamily construction deal, for example, a sponsor chose an 8.99% private loan over a low-6% bank quote because it offered higher day-one disbursement and reimbursement of soft costs, plus rapid draws without bank committee delays. This marks a shift in borrower priorities, favoring execution speed and deal certainty as much as rate.

The End of ‘Hard Money’ Stereotypes

Bank versus private lender isn’t a pure price comparison—it’s a choice between fundamentally different loan products. Gumption co-founder Jonathan Dickerson notes that today’s private debt isn’t just the “hard money” of a decade ago, reserved for tough credits or emergency closes often priced in the high teens. Instead, private CRE funds now routinely underwrite transitional assets, offer leverage up to 90–100% for build-to-suit projects, and provide hybrid structures that combine senior, pref, and mezzanine debt. The premium is about buying tailored capital stacks, flexible repayment terms, and execution speed that falls outside most banks’ credit box. Conventional lenders, meanwhile, still win on price for straightforward deals that fit tighter guidelines—but sponsors are paying up for differentiation elsewhere.

Some private lenders are even quoting rates in the 6–7.5% range for stabilized or bridge multifamily deals, occasionally matching or beating banks, but typically earning their spread via structure and leverage rather than just rate. The segment is now filling gaps left by both banks’ credit tightening and the shrinking CMBS market.

Bank Lending Lags as Private Debt Trends Up

Private lender pricing isn’t static. Platform-wide, Gumption tracked CRE loan rates climbing from an average of 6.34% in Q1 to 6.62% in Q2 2026, amid higher Treasury yields and persistent inaction by the Fed on rate cuts. Bank and credit union loans, typically tied to Treasuries or SOFR, have seen their own pricing inch up as the five-year Treasury rises. Still, Gumption’s data shows the overall average staying well below the Q2 2024 peak of 8.14%.

Asset class variations persist. Industrial remains the cheapest at 6.51% (banks), with multifamily close behind at 6.57%. Hospitality (7.10%) and land loans (7.50%) command higher rates and are tougher to place. Notably, construction request activity jumped roughly 50% since January 2026. New construction averaged 6.89% (with 70.5% loan-to-cost), yet lenders continue submitting competitive term sheets.

Refinancing activity is also on the rise, reflecting a broader market resurgence as sponsors work through debt maturities and reposition assets. That trend is becoming more urgent as a growing share of transitional loans approaches maturity, pushing borrowers to seek flexible refinancing options outside traditional banks. Notably, construction request activity jumped roughly 50% since January 2026. New construction averaged 6.89% with 70.5% loan-to-cost, yet lenders continue submitting competitive term sheets.

Why It Matters

The resilience of private CRE credit has become a defining trend since bank pullbacks accelerated in 2023. Even as average private lender rates run over 300 BPS above banks according to Gumption Technologies, sponsors prioritize speed, flexibility, and deal certainty—especially in construction and transitional situations where timing is critical and capital structure creativity is valued.

This willingness to pay up underscores a deeper shift in risk allocation and CRE capital market structure. Debt funds, equipped with streamlined underwriting, often non-recourse terms, and a lighter touch on covenants, now act as the go-to option for sponsors who need execution measured in weeks rather than months. Gumption’s data highlights that debt funds often wire draws in 48 hours, fund without appraisals, and allow greater use of sponsor track record versus traditional balance sheet tests. For many sophisticated borrowers, such time savings or liquidity retention offset the rate premium, especially when access to capital drives competitive advantage.

Savills and Trepp data have consistently shown that banks are shrinking CRE lending, with origins down double digits in 2025. As conventional supply dwindles, private credit steps in to fill gaps for everything from value-add repositionings to stabilized bridge debt. Sponsors increasingly view their capital stack as a bespoke solution, not a commodity—positioning private credit for durable demand regardless of headline rates. As long as banks stay defensive, debt funds stand to benefit from these structural shifts in sponsor needs and lender appetite.

What’s Next

Gumption Technologies’ CEO Jonathan Dickerson reports a cautiously optimistic outlook for the remainder of 2026. Loan requests and lender participation are both trending higher, with construction and refinancing activity leading the charge. Borrowers are becoming savvier at comparing cost-per-year with value gained through speed or flexibility, rather than just focusing on rate. Should rates stabilize and the wave of asset repricing wind down, private credit is likely to claim a greater share of CRE debt funding alongside conventional lenders. Expect competition to intensify, especially as debt funds seek more stabilized product while maintaining their edge in execution. The market’s next leg will hinge on both Fed policy and sponsors’ continued appetite for optionality over absolute cheapest cost of capital.