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Commercial real estate pricing
Term, amortization and collateral-driven loss given default for CRE deals.
Financial Services / Commercial Loan Pricing
Commercial loan pricing software that shows what a deal really earns
A relationship manager quotes a spread, credit approves it, and nobody can say whether the deal covers its funding, its expected loss and the capital it ties up. Agnotic Technologies builds commercial loan pricing software for banks and commercial lenders that prices each deal on its full cost and shows the relationship it belongs to.
Funding cost
From your FTP curve
Capital
Charged on every deal
Relationship
Deposits and fees in view
Trusted by global innovators
Industry Overview
What is commercial loan pricing software?
Commercial loan pricing software calculates the rate a business loan must earn by adding its funding cost from the bank's funds transfer pricing curve, expected loss, capital charge and operating cost, then testing the result against a return hurdle. Agnotic Technologies builds this pricing engine for banks and commercial lenders, with exception approvals and model governance.
Industry Challenges
Why do commercial deals get mispriced?
The pricing gaps we look for first in a lender's current process.
Funding cost comes from one average rate, not the point on the curve that matches the loan's term and repricing.
Expected loss uses the rating model's default probability, but loss given default is typed in by the banker.
There is no capital charge, so a long unsecured term loan looks as profitable as a short secured line.
Deposits and fee income from the relationship are invisible, so bankers either discount blindly or lose the client.
Exceptions are approved by email, and nobody can report how far below model the book was priced last quarter.
Model changes go live without anyone checking them against the margins the bank actually earned.
Pricing waterfall
What goes into the price of a commercial loan?
Each line of the waterfall, the system that supplies it and who owns it. Treasury and credit set the rates; the software holds the method and shows its working.
| Waterfall line | What it covers | Input system | Owner |
|---|---|---|---|
| Base funding cost | Matched-term rate for the loan's term and repricing profile | Treasury FTP curve service | Treasury and ALM |
| Liquidity premium | Charge for term funding and for undrawn commitments that may be drawn | FTP methodology tables | Treasury |
| Expected loss | Default probability, loss given default and exposure at default | Risk rating model and collateral system | Credit risk |
| Capital charge | Cost of the capital the exposure consumes, at the bank's hurdle rate | Capital allocation model with risk weights | Finance |
| Operating cost | Origination and servicing cost for the loan type | Cost allocation from finance | Finance |
| Relationship offset | Value of deposits and fees tied to the borrower | Core banking, treasury management and CRM | Relationship banking |
| Margin and return | Spread over all costs and return on capital against the hurdle | Pricing engine | Pricing committee |
Our Approach
How should a lender approach a pricing build?
Three decisions we make with treasury, credit and finance before any screen is built.
Price from systems, not from a spreadsheet
Every waterfall line reads from the system that owns it. A banker can see an input but cannot overwrite it without an exception.
Show return on capital next to the rate
The banker sees the rate, the margin after every cost and the return against the hurdle on one screen, before the quote goes out.
Make exceptions a workflow
A deal priced below model or below the floor goes to the right approver with the reason, and the decision is kept for reporting.
Capabilities
What do we build into a commercial loan pricing engine?
The loan pricing services we scope for commercial and business banking teams.
Deal pricing workspace
Structure, term, repricing, fees and collateral entered once, with the waterfall recalculated as the deal changes.
FTP curve integration
Matched-term funding and liquidity charges read from treasury's curve and tables for the deal date.
Expected loss inputs
Default probability from the rating model and loss given default from collateral data, never typed by hand.
Capital allocation
Capital consumed by each exposure, charged at the hurdle your finance team sets.
Relationship profitability
Existing loans, deposits and fee income for the borrower and related entities in one view.
Exceptions and approvals
Floors, below-model pricing and approval chains by amount and authority, with reasons kept.
Pricing model governance
Versioned methods and parameters, change approval and a record of which version priced each deal.
Back-testing and reports
Priced margins compared with booked and realized margins, by banker, segment and product.
How It Works
How does one deal get priced and approved?
The path we build for a single commercial deal, from the first term sheet to the booked loan.
Deal intake
The banker starts a pricing case from the CRM opportunity or the loan origination system.
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1
Pull inputs
Funding curve, risk rating, collateral, cost allocation and the relationship's deposits and fees are read from their systems.
02
2
Calculate the waterfall
Each line is computed with the current model version, and the result is shown as rate, margin and return on capital.
03
3
Test against hurdle and floor
Deals that clear the hurdle and floor can be quoted; others open an exception.
04
4
Route exceptions
The exception goes to the approver for its size and type, with the banker's reason and the relationship view.
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5
Lock and hand off
The approved price and model version pass to the origination system for documents.
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6
Back-test after booking
Booked and realized margins flow back so the pricing committee can compare them with the priced margin.
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7
Engineering Stack
Systems and standards behind loan pricing software
Chosen to fit your treasury, risk and origination stack. We build on your cloud account.
Pricing core
Versioned pricing methods and parametersCalculation service with full working shownDeal and exception store
Integration
Treasury FTP curve and ALMRisk rating and collateral systemsLoan origination systemCRM and core banking
Data
Relationship and entity hierarchyWarehouse feed for back-testingPricing history per deal
Security
SSO and role-based approval limitsAudit log of every input and overrideEncryption in transit and at rest
Sizing
What sizes a loan pricing engine build?
A loan pricing engine build is sized by six drivers: the loan products priced, the FTP curve and rating model feeds, where collateral and loss given default data live, whether relationship pricing is in the first release, the exception approval levels and the back-testing history. Agnotic Technologies answers each one with your treasury and credit teams before scoping.
| Driver | Question to answer before scoping | What it changes in the build |
|---|---|---|
| Loan products | Which products move first: term loans, lines of credit, commercial real estate or equipment finance? | Each product brings its own structure fields, repricing rules and waterfall settings to build and test. |
| FTP curve and rating model feeds | Does treasury publish the curve through an API or a daily file, and does the rating model return a default probability for each deal? | A file feed needs a load and date check; a model without a deal-level output needs a mapping layer first. |
| Collateral and loss given default source | Is loss given default calculated in a collateral system today, or typed in by bankers? | If no system holds it, the build adds collateral capture and an LGD method that credit signs off. |
| Relationship pricing in the first release | Do deposits and treasury fees count toward the deal from day one? | Adds core banking and CRM reads, entity hierarchy matching and rules for which balances qualify. |
| Exception approval levels | How many approval tiers exist by amount, product and gap to model? | More tiers and delegated authorities mean more routing rules, notifications and exception reports. |
| Back-testing history | How many years of booked deals, with the margin each was priced at, can be re-priced through the engine? | Deeper history adds data clean-up but gives a stronger check before the old model is switched off. |
Measured Impact
What should a pricing committee review?
Reports we build with your pricing committee and finance team.
Hurdle
Deals against return target
Priced deals above and below the hurdle, by segment and banker.
Exceptions
Below-model pricing
Exceptions by approver, reason and size of the gap to model.
Back-test
Priced against realized
Margins at pricing compared with margins earned after booking.
Relationship
Whole-client return
Return across loans, deposits and fees for each relationship.
Use Cases
Where do commercial lenders start?
First releases we scope, each one priced on the full waterfall from day one.
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Lines of credit
Liquidity charges for undrawn commitments shown alongside the drawn spread.
03
Relationship pricing
Deposits and treasury fees counted toward the deal, with rules for what qualifies.
04
Exception workflow first
Approvals and reasons captured before the full engine replaces the spreadsheet.
05
Pricing model rebuild
Moving a spreadsheet model into a versioned, tested calculation service.
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Loan pricing for startups
A new commercial lender or fintech building its first pricing method on the same structure.
Integrations
Which systems does a loan pricing engine connect to?
The systems a commercial pricing engine reads from or writes to, agreed during scoping.
Funding cost
Treasury FTP and ALM
Default probability
Risk rating system
Loss given default
Collateral management
Deal hand-off
Loan origination system
Opportunities
CRM
Deposits and balances
Core banking
Back-testing
Data warehouse
Cost allocation
General ledger
Compliance-First Development Services Backed by Global Standards
We build secure, scalable products designed for privacy, interoperability, and regulatory readiness from day one across every sector we serve.
General Data Protection Regulation
Implement lawful consent flows, data minimization, and secure processing for global data privacy.
Service Organization Control 2
Verified controls for security, availability, and confidentiality of enterprise data systems.
Information Security Management
Adhering to the international gold standard for managing information security risks.
Our Edge
Why Global Leaders Choose Us
We combine deep technical expertise with industry-specific knowledge to deliver solutions that aren't just functional, but transformational.
Enterprise-Grade Security
We implement rigorous security protocols and compliance standards (HIPAA, GDPR, SOC2) across all industrial solutions to protect sensitive data.
High-Performance Scaling
Our architectures are built to handle massive data loads and user bases, keeping performance steady whether you're serving ten or ten million.
Accelerated Time-to-Market
Using our suite of internal tools and proven frameworks, we cut setup work so your first release reaches users sooner.
Embedded AI Integration
Beyond simple wrappers, we build deep-learning integrations and predictive analytics directly into the core of your industry-specific workflows.
Engagement Model
How does a loan pricing engagement work?
A pricing build usually moves one loan product first. We fix what that release contains, and when it ships, before work starts.
01
Scoping call
We review your current pricing model, the systems that hold each input and the first product to move.
02
Waterfall workshop
Treasury, credit and finance agree the method for each line and who owns each input.
03
Fixed-scope first release
The pricing workspace, input integrations and exception workflow for one product.
04
Back-test and tune
Historical deals re-priced through the engine and compared with the old model and realized margins.
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Scale and support
More products, relationship rules and reporting under model change control.
Facts and sources
Which rules and guidance shape a loan pricing engine?
Short facts behind the funding, capital and fair lending parts of the build, each linked to its primary source.
The interagency guidance on funds transfer pricing describes FTP as an important tool for measuring risk-adjusted profitability: by allocating funding and contingent liquidity risks to business lines, products and activities, it influences the volume and terms of new business.
Source: Federal Reserve SR 16-3, March 1, 2016Under the Federal Reserve's standardized approach, a Board-regulated institution must assign a 100 percent risk weight to its corporate exposures, apart from listed exceptions such as certain exposures to qualifying central counterparties.
Source: 12 CFR 217.32(f) (eCFR)A Board-regulated institution must maintain a common equity tier 1 capital ratio of 4.5 percent, a tier 1 capital ratio of 6 percent and a total capital ratio of 8 percent, among other minimums.
Source: 12 CFR 217.10(a)(1) (eCFR)Regulation B covers business credit, meaning extensions of credit primarily for business or commercial purposes, and defines a credit transaction to include every aspect of an applicant's dealings with a creditor, including the terms of credit.
Source: 12 CFR 1002.2(g) and (m) (eCFR)A creditor must not discriminate against an applicant on a prohibited basis regarding any aspect of a credit transaction.
Source: 12 CFR 1002.4(a) (eCFR)
Voice of success
We don't just build products; we forge lasting partnerships. See how we've helped industry leaders transform their vision into technical reality.
“I can clearly see how Agnotic has a unique way of handling end-to-end development. They are always active on quick chat and provide support quickly.”
Aaron Phelan
Founder, Benchmark
“Agnotic combines deep technical expertise with strong domain knowledge. They understand the business context, anticipate challenges, and make collaboration smooth and effective.”
John Pasmore
Founder, Latimer
“Agnotic is the best technical team we evaluated. Their engineering excellence made our work dramatically easier and allowed us to stay focused on what matters most for maternal care outcomes. They took full ownership of the technical execution, and we are always happy to continue working together.”
Kim Smith
Founder, My Lauren
Related pages
Related lending and credit services
This page covers commercial deal pricing. These pages cover the scoring, origination and analytics around it.
Credit risk scoring software
Scorecards, default models and consumer risk-based pricing.
Loan origination software
The application and decision workflow a priced deal hands off to.
Lending analytics
Vintage, roll rate and CECL inputs at loan level.
Banking CRM
The relationship record that pricing reads deposits and fees from.
Core banking software development
The ledger that holds balances and booked loans.
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Frequently Asked Questions
Consumer pricing usually maps a score band to a rate card. Commercial pricing builds each deal's rate from its own funding cost, expected loss, capital and operating cost, and often counts the client's deposits and fees. Scorecards and rate cards are covered on our credit risk scoring page.
No. Your treasury team owns the funding curve and your finance team sets the hurdle. Agnotic Technologies builds the engine that reads those inputs, applies your method and shows its working on every deal.
Regulation B covers business credit, and its definition of a credit transaction includes the terms of credit. We build pricing and exception reports your compliance team can use to review outcomes; what to test and how is their decision.
Yes. The engine can run as a service the origination system calls, with the pricing workspace opened from the deal, so bankers do not re-key data and the approved price lands on the loan record.
Methods and parameters are versioned. A change is tested by re-pricing historical deals, approved by the pricing committee and released with a version number that is stored on every deal it prices.
The six drivers in the sizing table on this page set it, and the products and input feeds usually weigh most. A loan pricing calculator cannot answer them, so we estimate after reviewing your treasury and credit setup.
Mostly on how quickly treasury, risk and origination data can be connected. One product with the full waterfall and exceptions is a typical first release, dated after the waterfall workshop.
Industries