Business Lending is Turning Positive

As the country continues to deal with the pandemic and the challenges it brings to the “re-opening” of the economy, one thing is clear: lenders are sitting on cash and trying to find ways to deploy it. Across different products and credit spectrums, the offers are getting better and better. Although the willingness of borrowers to take on more debt is still less than fantastic, it is definitely on the upswing. This could be attributed, in part, to the fact that:

a) Many small businesses are burning through the government assistance they have received and they need more money to buy inventory, market, etc.

b) Congress may be likely to give more money to unemployed people and businesses that are still struggling. It is unlikely that healthy and recovering businesses will get more “free money.” As a result, the healthy businesses are accepting offers. Below are examples of a few interesting businesses loans funded last week:

A

Industry:  Consulting Revenues: $400,000 per month Offer:  $1.5 million Term: 60 months Other details: Business has 4 open positions with remaining balances of $750,000. Lender is refinancing these balances and giving the business an additional $750,000. Monthly payments will be reduced by over 70%.

B

Industry: Food manufacturing Revenues:  $750,000 per month Offer:  $7 million facility (with $3 million as the initial drawdown) Term: 3 years Other details: This hybrid facility will leverage the company’s AR and inventory and have a “growth” line of credit. This will allow the owner to avoid dilution from an equity raise until he can further execute his growth initiatives.

C

Industry: Health and wellness Revenues: $100,000 per month Offer:  $75,000 Term: 3 month Details: Merchant needed a short term bridge until money is received from expected EIDL and a tax refund.

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