Asset-based lending: The post-crisis landscape
“But most banks aren’t set up to do heavy-duty asset-based lending—and, in fact, most have gotten away from it,” he adds. “We have looked into it in the past, but have decided there are too many other opportunities to pursue without taking on that level of risk exposure, monitoring and expense. Instead, we refer intensive asset-based lending out to asset-based lenders, but hold onto the deposits and the rest of the banking relationship.”
Filling the Gap
According to Wooding, there’s a gap in the market right now for asset-based loans of $1 million or less. “I don’t know where a business turns that needs a less-than-$1 million ABL-monitored line of credit. Most commercial banks want to do larger deals.”
This represents a tremendous opportunity for small and mid-sized asset-based lenders, for whom this size loan is usually a home run. Such a loan can be a stepping stone to help a business through a financing transitional period until it once again qualifies for traditional bank financing.
The bottom line: There are many nuances to C&I lending that not all bankers are familiar with. Tremendous opportunity currently exists for asset-based lenders and banks to team up and, working together, deliver the kinds of financing solutions that are desperately needed by many business borrowers today.
Tracy Eden is the National Marketing Director for Commercial Finance Group (CFG), which has offices throughout the U.S. and Canada. CFG provides creative financing solutions to small and medium-sized businesses that may not qualify for traditional financing. Visit http://www.cfgroup.net or http://www.fvf.ca or contact Tracy at email@example.com to learn more.