Issue No. 32

One of the things we do at Pier is provide credit facilities to smaller specialty finance companies, collateralized by portfolios of contractual cash flows. This strategy is core to Pier’s founding story, and it came from a problem I experienced firsthand.
 
Before founding Pier, I ran capital markets at a specialty finance originatorin the real estate space. We were growing steadily, and our biggest operational headache was the credit facility we used to fund loans before selling them to the market. Most available structures simply didn’t fit smaller lenders. Large firms were trying to apply the practices, timelines, and complexity of a $100M facility to a much earlier stage business.
 
We ultimately said “no” to cheaper cost of capital and relied on a family office line instead. It was more expensive, but it caused the least friction. Around that time, I started comparing notes with other specialty finance CEOs and CFOs. What I found was consistent across the board: the early-stage facility was the most common source of frustration in their lives.
 
Lean teams were spending enormous effort managing revolving structures and eligibility rules that were supposed to reduce risk, but in practice were often creating more of it.
 
That led to a simple realization: At the early stage, the credit facility needs to be as simple as possible to operate and report on.
 
So, when we started Pier, we deliberately built a product designed for smaller lenders. We chose a delayed draw structure that doesn’t revolve, with cleaner reporting and easier administration. We charge two fees: an upfront origination fee and a monthly interest rate. No draw fees, unused line fees, or prepayfees. We also start with a fair credit agreement that avoids unnecessary negotiation and keeps closing timelines short.
 
What we’ve found is that borrowers will pay more for this kind of simplicity. The product fits the needs of smaller operators far better, and we believe it allows us to deliver strong returns to our LPs with less risk.
 
— Jillian

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President Trump is making twosignificant pushes to artificially hold down rates in 2026. 

1. He appointed a Fed Chair he can control, risking Fed independence.
2. He stated he wants credit card interest rates capped at 10%.

While I am a fan of certain aspects of the "mixing thingsup" that has come from the Trump presidency, artificially controlling rates is not one of them. I am a firm believer in free markets and worry about the extensive longer term economic repercussions that could come from this.

Regarding credit card interest rates, I see it as a short term solution that will create immense long term problems.

First, I do not believe a credit card rate cap would come to fruition. But, creating a cap would not drive banks to lend to everyone at 10%. Banks will just stop lending to the riskier borrowers. It's not economically viable for them to lend to high risk borrowers.

I would venture to guess that 90% of credit card holders would no longer qualify or have access to credit cards. It would be a huge loss and would send those borrowers to riskier, less regulated lenders, without the ease and transparency of revolving credit cards.

If Trump wants to fix consumer credit, he should significantly raise the bank (artificial) ratecap from 36%. It would put state licensed lenders in a fix but drive more lending to more highly regulated entities. Although it seems counterproductive, I believe it would work.

- Conor