Tuesday, August 12, 2008

Credit Tightening Results in New Asset Lenders

According to the July 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices, at least 60 percent of domestic banks reported having tightened lending standards on commercial and industrial (C&I) loans to small businesses and large and middle-market firms over the past three months.

About 80 percent of domestic banks reported having tightened their lending standards on commercial real estate loans over the past three months.

Both of these statistics point out why new lenders are jumping into the lending markets for both asset based business loans and real estate bridge loans.

On Monday I met with a new lender offering asset-based loans ranging in amounts from $500 thousand up to $10 million, an under-served niche within the asset-based lending market.

This lender is a new joint venture backed by a very large, east coast based fund. They will primarily lend against collateral consisting of any combination of machinery & equipment, rolling stock, inventory, accounts receivable, real estate, and intellectual property. Typical clients include small business owners, turnarounds, start-ups, businesses needing bridge loans, and companies needing bankruptcy exit financing.

The main target for these asset based loans will be small businesses with no financing alternatives due to the liquidity crunch and tightening credit requirements in regional banks.

Targeting businesses throughout the United States, this asset based lender looks strictly at asset value and does not require the borrower to have audited financial statements.

Expect pricing to reflect the risk profile of the borrower and the quality of the assets. In other words, don't expect bank rates!

If this lender sounds like a good fit for your financing needs, read "Matchmaking for Business Loans" and give me a call!

Tags : Federal Reserve , business loans , credit crunch , asset based loans , accounts receivable , equipment , inventory , collateral loans

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