This primarily reflects the fact that many banks have curtailed their commercial lending activities, particularly to small businesses.  At the same time, a number of large non-bank institutions have aggressively expanded their commercial lending operations. We have established excellent relationships with many of these non-bank sources.

NON-BANK LENDERS
Changes in the banking industry have had a serious impact on the small business community. Many businesses find it difficult to secure needed financing from traditional bank lenders.

Non-bank lenders are able to make long term loans and are less restrictive as to which types of businesses qualify. Loan terms up to 25 years on real estate, 15 years on equipment, and 10 years on working capital are available at competitive rates.

Non-bank lenders are national in scope, yet responsive to client needs. They are able to make loans quickly.

ALTERNATIVE TYPES OF NON-BANK LENDERS

Asset Lenders

• Hard Asset Lenders
Require good and marketable collateral as the primary underwriting criteria. These lenders will loan up to a percentage of the liquidation value of the collateral. That percentage, on various asset classes, will vary between lenders.

• Cash Flow Lenders
Rely on historical and projected cash flow as the primary underwriting criteria. Collateral is a consideration but not the primary one. These lenders are looking for annual cash flow (EBITDA) to exceed annual debt service by a certain percentage. This is called Coverage Ratio.

• Factoring
Provides financing with Accounts Receivables as collateral. Factor buys the receivables for a discounted amount, plus a service charge. Attractive to newer companies without hard assets. Discounts can run as high as 25% to 30%.

• Leasing
There is a variety of kinds of leases. Basic considerations center around the interest rate, term of the lease, and the use of depreciation.

Non-Asset Lenders

• Venture Capital
Expensive form of financing; compensation usually includes an equity position, a premium interest rate and a defined exit strategy. They prefer an IPO (initial public offering) as a long-term goal. It is a viable alternative for a start-up or early stage company with little capital and collateral. Primary asset is often "intellectual property."

• Syndications
Public and private. Ranges from IPOs and private stock offerings to limited and public partnership.