A substandard loan is a classified credit with well-defined weaknesses that jeopardize repayment, where the lender faces a distinct possibility of sustaining some loss if the weaknesses are not corrected. It sits below special mention and above doubtful in the regulatory scale.
A substandard classification drives reserves, examiner attention, and capital pressure — which is why lenders often resolve substandard credits, including by selling them. See criticized and classified assets.
Special mention flags potential weaknesses deserving attention; substandard means the weaknesses are well defined and a loss is distinctly possible — substandard is classified, special mention is not.
Yes — substandard credits are routinely sold for cash, priced to collateral and recovery path.
Standing Bid Capital, directly and all-cash, $250K–$25M.