As all of us are well aware, when it comes to C&I commercial lending, banks are tracking yield and considering loan opportunities that reach posted thresholds. Certainly different institutions have various degrees of profitability expectations, but clearly – if a loan will not support enough profit for the bank it will not be considered. Unfortunately this results in a lot of opportunity on the cutting room floor.
This leaves commercial lenders and relationship managers in uncomfortable situations. They might believe in the borrowing company and understand the extenuating circumstances relating to their complicated loan request, but by the time a loan application gets through underwriting there is little likelihood the request will be approved.
What to do? Securing operating accounts which are highly profitable and also offering ancillary bank products can be helpful to a commercial account – so why turn away a bank customer just because you can’t get them into a working capital facility?
That’s where Creative Capital Associates will help you. If you are thinking long term in your lending strategy, bring the borrower to us for the short term and let us grow them into a loan where they will qualify. Consider us the minor league platform. You secure their operating accounts, and send them to the farm team to improve their Balance Sheet or FICO scores, pay off delinquent taxes, get some historical financials and land some more contracts. Basically clean up the story and then they’ll come back when they are ready.
We can begin factoring their invoices inside of 10 days, with no application fees or closing costs. Our receivables factoring only relies on the creditworthiness of the account debtor. The client basically has an open line based on leveraging their finished contract work. We do require a first position on those receivables, so if there is an existing loan it will require an inter-creditor agreement.
But the point is – don’t turn away a bank client (that you probably know can’t get a bank line,) instead allow them to become a member of your institution and outsource the working capital piece for the time being and monitor their progress.
And a quick word about those merchant cash advance (MCA) fintech loans. Fundamentally what they offer are term loans. They offer a check and then the client makes payments. This is fine for financing some sort of purchase or capital expense – it is not how a company should gain access to working capital when bringing on new contracts. A company needs to have open and regular access to capital on a weekly or monthly basis which is exactly the solution invoice factoring is designed to accomplish.
Consider how working closely with us can ultimately improve your own bottom line. We’re working hard to gain your confidence as the ‘go to’ team member.