Welcome to The Green Zone Briefing: Part 3 of Confidence Cracks: The Banking Industry is Changing the Rules. In this week’s edition we move beyond capital access worries and demand signals. Now we’re looking at the banking industry’s underwriting changes, a silent shift that will determine who gets funded, who gets delayed, and who gets shut out entirely. Changes Green Zone Capital Advisors is addressing that no one is talking about.

You can read more about Part 1 of Confidence Cracks: The Consumer Sentiment Warning Sign For Your Capital Strategy and Part 2 of Confidence Cracks: Access Under Pressure.

You may believe your business will sail through its next credit renewal process because your numbers are good. That optimism may be justified in your day-to-day operations, but when the bank underwriting framework shifts like it’s doing now, those same numbers can fail you. Banks are quietly resetting what they regard as acceptable risk, and that means even companies with clean financials need a new playbook.

According to the American Bankers Association (ABA) and the Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS), a modest but meaningful net share of banks in Q3 2025 reported tighter standards for commercial and industrial (C&I) loans to firms of all sizes. This tightening is reinforced by data showing the net percentage of domestic banks restricting C&I lending to large and middle-market firms stands at approximately 6.5%.

“Banks aren’t just tightening; they’re rewriting the rules, and the companies that treat renewals like a formality will be the first ones caught flat-footed.” - Stacey Huddleston, CEO of Green Zone Capital Advisors.

On the real-estate side, the renewal cliff is very real. The Mortgage Bankers Association (MBA) estimates that 20 percent of commercial and multifamily mortgages — about $957 billion of a $4.8 trillion pool — will mature in 2025, up from 2024. The implication? Even previously bankable commercial loans will face harsher scrutiny, higher pricing, and less flexible terms.

Why This Matters

Here’s what the shift means for your business:

• Collateral alone won’t open doors anymore. Banks increasingly care about forward metrics: borrowing base sensitivity, vendor/payor concentration, liquidity buffers. Having a strong asset behind you is still important but insufficient without structural resilience.

• Renewals will feel like new deals. With underwriting resetting, lenders are treating maturities and renewals like fresh facility requests. Expect more questions, deeper diligence, and slower decisions.

• If your structure is stale, you’ll pay for it. Rates, covenants, maturities, and advance rates are increasingly negotiated based on timing, industry, and risk profile. Two companies with identical financials may see dramatically different terms if one is proactive and one is reactive.
  

The error-cost of waiting is increasing. Historically you could catch up when the renewal call came in. Now you may enter the process at a disadvantage. The smarter move is to act before your lender does.

Real-World Insight

A privately held industrial services firm was preparing for a working capital line renewal when their bank asked for updated projections and scenario stress testing. The firm’s numbers met the DSCR and advance rate tests — but their industry had seen two consecutive quarters of demand softness. The commercial bank classified it as a higher-risk category and set tougher terms: lower advance rate, shorter maturity, and more reporting.

What You Should Do Right Now

1. Map upcoming maturities and renewals. Identify every loan, line, lease, or note with expiration in the next 12 – 18 months. Prioritize the ones overlapping the reset window.

2. Run downside scenarios. Assume demand falls 10 – 20 %, customers delay payments 30–45 days, and costs rise 5–10 %. Embed these in your financing model.

3. Update your capital-stack playbook. Review key terms: maturity, amortization, advance rate, subordination, and covenant flexibility. If your stack hasn’t been reviewed recently, you’re behind.

4. Pre-engage lenders or alternative capital. Approach banks, private credit funds, or structured finance firms now — not when the countdown to renewal starts.

5. Refine your financial story. Convey not just what you’ve done, but how you’ll do it when conditions change. Include liquidity buffers, vendor/payor analysis, and working-capital cycle stress tests.

Green Zone Insight

The commercial bank underwriting terrain has changed quietly, but dramatically. Banks are optimizing for volatility, not growth. They’re tightening lines, shortening structures, increasing oversight. If your business operates under the assumption that “we’ve always borrowed this way and it will continue,” you’re vulnerable.

At Green Zone Capital Advisors we prepare you for this new environment. We underwrite your business like a credit committee would: stress testing for demand fall-off, borrowing-base compression, and structural shocks. Then we align you with the right capital partner — bank, private lender, or hybrid. All before you walk into that LOC renewal meeting blind.

For companies whose structures haven’t been reviewed since pre-2022, the window to act is narrowing. We see refinancing terms getting tougher, market appetite shifting, and approval timelines stretching further.

The businesses that win will be those who treat commercial loan renewals or bank placement as a strategic execution, not a checkbox.

If you want to ensure your next capital event works in your favor, connect with us.