A national private lender is deliberately avoiding major urban markets, citing regulatory and political conditions that make lending more challenging. H. Jack Miller, President and CEO of Gelt Financial, says the firm now focuses on suburban and smaller urban markets where local laws and regulations are less burdensome.
“The big cities are very anti-lender,” Miller says. “They make it very difficult, and we try to stay away from them.”
Gelt Financial specializes in bridge loans averaging $365,000 and has built its business around markets with favorable demographics and regulatory environments. Miller describes Gelt as “an urban and suburban lender.” Still, the firm avoids both rural areas and large metropolitan centers. This selective approach reflects a belief that the regulatory and political climate in major cities imposes costs and risks that outweigh potential deal volume.
City Regulations Deter Private Lenders
Miller makes clear that Gelt’s geographic strategy is shaped by ease of doing business, not deal volume or property fundamentals alone. He does not identify specific cities or regulations.
“Certain locations we don’t want to touch,” Miller says, describing how location is a core part of Gelt’s underwriting process, alongside leverage and other risk factors.
Private lenders operating in major cities commonly cite issues such as rent control, tenant-protection laws, and slow foreclosure processes as factors that raise lending risk. In places where government policies favor borrowers over lenders, even collateral-backed loans can become problematic. Local rules that delay foreclosure or complicate property recovery after default increase lender exposure.
Miller also emphasizes the importance of demographic trends. He says Gelt targets “locations that more people are moving to than moving out of,” underscoring a focus on markets with population growth and economic expansion. Sun Belt markets and similar growth regions tend to have less restrictive regulatory environments and local governments more supportive of real estate investment.
Borrowers Face Fewer Financing Options
As private lenders like Gelt Financial steer clear of large cities, borrowers in those markets face fewer financing options. This creates a two-tier lending environment: borrowers in lender-friendly regions access better terms, while those in major cities face higher costs or limited options.
Reduced access to capital can have broader market effects. If lenders are unwilling to finance purchases in certain cities, buyers may find it harder to acquire properties, and existing owners may struggle to refinance or sell. The result can be lower liquidity and downward pressure on property values.
Borrowers in these markets must often seek out lenders willing to operate in more challenging regulatory environments. They may face higher rates or stricter loan terms as lenders price in added complexity and risk. Lenders who remain active in these cities typically adjust pricing and requirements to account for the regulatory obstacles they face.
How Gelt Selects Its Markets
Gelt Financial’s lending criteria prioritize markets with growing populations, urban and suburban settings, and regulatory conditions that do not interfere with operations. The firm excludes rural areas, major cities, high-leverage deals, and construction or land development projects. This targeted approach allows Gelt to concentrate on transactions where it is confident in both the collateral and its ability to enforce loan terms if necessary.
The company’s three main business lines — bridge lending, non-performing loan acquisitions, and joint venture equity — serve borrowers with a range of capital needs. Bridge loans provide fast closings to borrowers who cannot qualify for bank financing. The non-performing loan business involves buying distressed debt from other lenders. Joint venture equity offers capital to borrowers who require equity rather than additional debt.
Gelt approves deals in five minutes and closes loans in three to five days. Miller identifies this speed as a key competitive advantage. “That’s what gets us across the finish line,” he says, particularly for borrowers who need fast closings.
A National Lending Trend Emerges
Gelt’s selective geographic approach may become more common among private lenders if regulatory challenges in major cities persist. As more lenders weigh the risks and administrative burdens of operating in these markets, capital could continue flowing toward regions where local governments support real estate lending and investment.
Whether major cities will adapt their policies to attract lenders remains uncertain. For now, lenders like Gelt are allocating capital to jurisdictions with more predictable and supportive regulatory environments. This trend could fragment the lending landscape, giving some borrowers clear advantages in capital access and loan terms.
As lending bypasses major cities, consequences may include tighter credit, reduced liquidity, and downward pressure on property values. For lenders, regulatory risk is now a primary factor in deciding where to do business — a shift that borrowers, policymakers, and investors will need to navigate as the landscape continues to change.
