Articles by Press Release
Secured Lenders Maintain Confidence Despite Inflation, Interest Rates
April 13, 2023
NEW YORK, NY, April 13, 2023 ─ Steady confidence in the asset-based lending market marked the fourth quarter, according to data released by the Secured Finance Network. Lenders maintained a positive outlook despite persistent inflation and rising interest rates.
SFNet surveyed bank and non-bank asset-based lenders (ABLs) on key indicators for its quarterly Asset-Based Lending Index and SFNet Confidence Index.
“As the U.S. economy remains under stress, the asset-based lending industry is primed to meet new demand,” said SFNet CEO Richard D. Gumbrecht. “Commitments have increased and portfolio performance remains solid. Should we see a recession, the ABL industry stands ready to provide vital working capital.”
In the most recent Confidence Index, lenders pointed to the resiliency of an industry that Gumbrecht describes as having “all weather” status. The most positive expectations were in the demand for new business, hiring and client utilization. But banks and non-banks shared low expectations around the overall business conditions.
Survey highlights
For banks, asset-based loan commitments (total committed credit lines) were up 2.4% in the fourth quarter compared to the previous quarter. Outstandings (total asset-based loans outstanding) fell by 1.6%, however. Commitment runoff increased by 7.8% quarter over quarter.
“Both new commitments and commitment runoff remain well below their year-ago levels for banks reporting in Q4 2021 and Q4 2022,” the report said. “Lower new commitments and higher commitment runoff reduced net commitments in Q4, the second consecutive quarter of decline.”
Non-bank lenders, meanwhile, saw total commitments rise by 6% last quarter. Total outstandings were up, as well, by 1.7%. Compared to the same quarter last year, total commitments and outstandings for non-banks rose by 10.4% and 18.6%, respectively.
“Further, a large majority of non-banks reported increased new commitments in Q4, which grew by 277% from Q3,” the report said.
Commitments runoff dropped by 21.9% from the third quarter. A sharp rise in new commitments and decreased runoff caused net commitments for non-banks to reach their highest level since Q3 2020, the report said.
In terms of credit-line utilization for bank lenders, the rate fell to 40.1%, marking the second consecutive quarterly decline after more than a year of growth. Non-banks saw a similar trend: Their combined utilization rate dipped from a multi-year high of 59.6% in Q3 to 53.8% last quarter.
“The drop for both bank and non-bank rates suggests that the ABL industry is returning to traditional seasonal fluctuations in utilization,” the report said, “as borrowers pay down outstanding balances, they typically build up in the third quarter of the year as they prepared for the holiday shopping season.”
As for portfolio performance at the end of 2022, banks started to see movement toward “more normal levels” after record strong performance in previous quarters. For banks, criticized and classified loans, non-accruals and gross write-offs all rose in Q4 relative to Q3 but are still at levels well below historic highs. Non-banks continued to report solid portfolio performance; 30% of survey respondents reported a decrease in non-accruals quarter-over-quarter and none saw an increase.
Now, in early 2023, the U.S. economy is at a fork in the road, the report said. “A strong labor market and low energy prices could continue to propel the economy; or, persistent inflation, weak real income growth and sectoral slowdowns could prompt a recession. For now, a period of relatively weak growth is the best bet, but asset-based lending, as an ‘all-weather’ industry, is well-positioned to meet new demand in any scenario.”
Details
For more publicly available information, click here. SFNet members who participate in the surveys have access to additional data and detailed reporting.
For a broader view of ABL trends and this industry, visit SFNet’s Annual Asset-Based Lending Industry Survey for 2022.
About Secured Finance Network
Founded in 1944, the Secured Finance Network (formerly Commercial Finance Association) is an international trade association connecting the interests of companies and professionals who deliver and enable secured financing to businesses. With more than 1,000 member organizations throughout the US, Europe, Canada and around the world, SFNet brings together the people, data, knowledge, tools and insights that put capital to work. For more information, please visit SFNet.com.
Media Contact:
Michele Ocejo, Director of Communications
Secured Finance Network
mocejo@sfnet.com, 212-792-9396
New California Disclosure Rules Reduce Capital Available to Small Businesses
March 21, 2023In a poll conducted by a leading trade association, since new CA disclosure rules were implemented in December 2022, 40% of respondents were found to be “no longer lending” to prospective borrowers who fall within the regulations’ threshold of less than $500,000. The poll was conducted by The Secured Finance Network (SFNet), an 80-year-old nonprofit with members representing the $4T U.S. secured finance industry. The new law, requiring sweeping financial disclosures, introduced by CA State Senator Steven M. Glazer in 2018, faced four years of strong opposition before being rolled out in December of 2022.
According to the poll, commercial finance companies would rather not lend to small businesses than comply with what they believe are “misguided and un-compliable” requirements. Mark Hafner, president and CEO of Celtic Capital Corporation, based in Calabasas, CA, said, “Unfortunately, we must now shy away from smaller deals (under the $500k threshold) as the disclosure requirements are extremely complicated to figure out and would require getting our attorneys and CPAs involved to ensure compliance. It’s just not worth the costs involved to fund a small deal anymore. The statute is not user friendly and, frankly, not representative of the true costs as there are numerous assumptions that have to be made to calculate the APR based on the state’s requirements. I honestly don’t think it was designed to meet the stated goal of the statute.”
Robert Meyers, president of Republic Business Credit, which does business with many California-based businesses, explained, “While the fines and penalties are clear under the regulations, the state has been unwilling to confirm our compliance or anyone else’s compliance. That fear is what has stopped 40% of our non-banks from doing business in the state, thus reducing access to capital for small- and medium-sized businesses. I expect this number to increase as time goes on. If the goal of this law was to better inform, it is actually doing the opposite as APR just doesn’t apply to our products.”
SFNet reports that its member companies provide “tens of billions” of capital annually in California to small businesses for essential working capital that funds everything from inventory, to work in process to payroll.
“Forty percent of billions is a large number,” said SFNet CEO, Richard D. Gumbrecht. “In attempting to find a one-size-fits-all solution to financial transparency, the State has created a complex set of requirements that misrepresent the actual cost of borrowing. Lenders are saying it’s not worth the cost and risk of complying. If this sample of 50 lenders is indicative of what we can expect, clearly that was not the intent of the legislation. And considering the demise of Silicon Valley Bank, it’s more important than ever that capital is not restricted in California.” The trade association is working with State legislatures to revise the statute. “Other states have found a simpler and more accurate way to protect small borrowers, and given the unintended consequences we are seeing, we are hopeful California will be receptive to these alternative approaches.”
To demonstrate how vital small businesses are to the U.S. economy, and the importance of not curtailing funding, consider these statistics: According to the U.S. Small Business Association (SBA), small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses and 99.7% of firms with paid employees. Of the new jobs created between 1995 and 2020, small businesses accounted for 62%—12.7 million compared to 7.9 million by large enterprises. A 2019 SBA report found that small businesses accounted for 44% of U.S. economic activity.
About Secured Finance Network
Founded in 1944, the Secured Finance Network (formerly Commercial Finance Association) is an international trade association connecting the interests of companies and professionals who deliver and enable secured financing to businesses. With more than 1,000 member organizations throughout the U.S., Europe, Canada and around the world, SFNet brings together the people, data, knowledge, tools and insights that put capital to work. For more information, please visit SFNet.com.
Media Contact:
Michele Ocejo, Director of Communications
Secured Finance Network
mocejo@sfnet.com, 551-999-5283
Commercial Funding Partners promotes Bailey Turner to Senior Vice President of Market Strategies
March 8, 2023
Commercial Funding Partners (CFP) has announced the promotion of Bailey Turner to Senior Vice President of Market Strategies. In this new capacity Turner will be responsible for overseeing marketing strategies and efforts to improve the company’s market positions and achieve desired business goals.
Turner joined CFP in 2017 as Business Development Officer and was quickly promoted to Vice President and subsequently Partner in the firm. During his tenure, Bailey has been a tremendous asset to the growth of the company. “Bailey’s contribution to bottom line growth of CFP has been paramount. We are excited to use his years of experience and excellent leadership skills to continue to expand our sales revenues and innovate our client experience,” said Buddy Zarbock, President of CFP.
Commercial Funding Partners is a national lender that provides businesses with no-hassle asset financing and leasing. CFP’s industry leadership and a wide array of financing products have helped its customers prosper since 1987. Please visit their website at www.com-funding.com
CFG Merchant Solutions Closes $20 Million Corporate Note Financing
March 6, 2023NEW YORK, NY. March 6, 2023
– CFG Merchant Solutions, LLC (“CFGMS”), a technology-enabled specialty finance and alternative funding provider, announced the closing of a $20.0 million investment-grade rated corporate note financing from a group of leading U.S.-based institutional investors. The transaction was assigned a BBB rating by a nationally recognized statistical ratings organization.
Since its founding in 2015, CFGMS has a proven track record of asset performance and profitability, and has funded more than $1.0 billion to over 25,000 small and medium-sized businesses (SMBs) across diverse industries throughout the U.S. The Company plans to use proceeds from the issuance to refinance a portion of existing debt and support continued growth of the business.
“Across the U.S. there are millions of healthy SMBs looking for financing to grow. This sector, however, is increasingly under-served by traditional financial institutions,” said Andrew Coon, Chief Executive Officer of CFGMS. “This transaction will provide CFGMS with additional flexibility and enable the Company to continue to grow our business and deliver valuable capital to customers.”
Bill Gallagher, President of CFGMS, added, “Given the volatile capital markets, the successful closing of this transaction demonstrates that institutional investors have confidence in our platform and financial performance, and expect to see continued growth. This credit investment significantly increases our funding capabilities and enhances our ability to take advantage of potential market opportunities.”
Brean Capital, LLC served as the Company’s exclusive financial advisor and sole placement agent in connection with the transaction.
About CFG Merchant Solutions
CFG Merchant Solutions (“CFGMS”) is an independent, technology-enabled alternative funding platform focused on providing capital access to small and mid-sized businesses that have historically been undeserved by traditional financial institutions and may have experienced challenges obtaining timely financing. The Company uses its historical transactional data, proprietary underwriting, predictive analytics, and electronic payment technologies and platforms to assess risk, and provide access to flexible and timely capital.
For additional information about the Company, visit: https://cfgmerchantsolutions.com/.
Contact:
Name: Richard Polgar
Title: Chief Financial Officer
rpolgar@cfgms.com
Mulligan Funding Closes $100 Million Securitization
February 6, 2023February 6, 2023 – SAN DIEGO – Mulligan Funding, one of the largest providers of SMB access to working capital in the country, today announced the closing of a $100 million asset-backed securitization (ABS). This new financing continues a history of impressive growth for the company, even during difficult market conditions. As Mulligan Funding’s first securitization, the senior bonds achieved an A rating from Kroll Bond Rating Agency (KBRA), the highest rating they will award a first-time issuer in this asset class. The facility has a 3-year revolving period and is expandable to $500 Million.
Mulligan Funding, known for its commitment to full transparency and its exceptional customer service, started in 2008 in the midst of the financial crisis, when traditional banks began to pull back from the small and medium-sized business lending market. The private, family-owned business, which has so far provided access to over $1bn in working capital to its customers, is honored to have achieved the noteworthy milestone of closing its first securitization.
David Leibowitz, chief executive officer at Mulligan Funding, shares, “This is a really significant step forward for us. It adds materially to the funding we require in order to continue on the path of responsible growth to which we remain committed. We’re particularly pleased that the ratings afforded to these notes by KBRA, constitute an affirmation of the disciplined approach to credit management which has always been at the core of our business strategy.”
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About Mulligan Funding
Headquartered in San Diego and named on the prestigious Best Places to Work SoCal 2022 List by Best Companies Group, Mulligan Funding serves as a leading provider of working capital ($5K – $2M) to the small and medium-sized businesses that fuel our country. Since 2008, we have prided ourselves on our collaborative, innovative, and customer-focused approach. Through our unique ability to combine technology, a human touch, and unwavering integrity, we help those we serve bring their dreams to life with our people-first culture.
Broker Fair Returns to New York City May 8, 2023
January 30, 2023
Broker Fair returns to NYC on May 8th at the New York Hilton Midtown. Once again brokers from the small business lending, commercial financing, revenue-based financing, leasing, equipment financing, factoring, and mca industries, will come together in the heart of New York.
“It’s exciting to return back to our pre-pandemic schedule and host Broker Fair in the Spring,” said event founder Sean Murray. “This is the biggest annual small business finance conference in Manhattan and we’re excited to be doing it again now for the sixth time since 2018. If you haven’t seen what this show is all about, 2023 is the best year to come and find out!”
Register here. For inquiries or questions, email events@debanked.com.
See last year’s sizzle reel:
DataMerch Reaches 100,000 Record Milestone
January 24, 2023
Tampa, January 24, 2023 /DeBanked/ — DataMerch.com, an online underwriting database for the alternative financing industry, announced reaching over 100,000 records in their database on Tuesday.
DataMerch was founded in 2015 with a goal to create a community database where funders can share performance information on merchant businesses. They started with zero records in 2015 and eventually built the largest and most widely used database of its kind in the alternative financing industry.
“We have never aggregated a single record from another source other than our funder-members,” said Co-Founder Cody Burgess. “Every single record in DataMerch has been entered individually by our members either manually, or via API. It’s amazing to see us start from nothing and grow our platform organically over time.”
Co-Founder Scott Williams said, “Our focus on building a database with high quality unique records has really paid off for our membership. We considered going down other paths by gathering data from other sources, but we ended up sticking to our original model. Outside sources of data can muddy the waters. What makes DataMerch successful is the fact that our information on defaults, slow pays, suspicious activity, and more, is not found anywhere else or on any other report.”
DataMerch leadership say they have made some recent major improvements including a search by legal name function, something membership has been asking for. DataMerch has also upgraded to a new and better version of their API. Further improvements are in the works for 2023.
About DataMerch
DataMerch LLC was founded in 2015 to help funders in the alternative financing industry make informed underwriting decisions. DataMerch members can screen their applications using DataMerch’s specifically designed EIN and legal name search. Members can also contribute to the database by entering unsatisfactory businesses. DataMerch currently has over 180 industry-leading subscribed members working together as a community. DataMerch can be accessed at https://www.datamerch.com and contacted for membership at support@datamerch.com
eCapital ABL North America Division Funds $95 Million in Q4 2022
January 23, 2023MIAMI – January 23, 2023 –eCapital Corp. (“eCapital” or “the Company”), a leading finance provider for businesses across North America and the U.K., issued $95M in lines of credit during the fourth quarter of 2022 through its eCapital ABL North America division. With this working capital, the companies – which include CPG products in the home and lawn categories – plan to grow their businesses by expanding product lines, scaling customer reach, and driving operational efficiency.
“Our team continued the momentum through the very end of 2022, by providing unparalleled financial solutions to our clients,” said Brian Cuttic, Chief Executive Officer Asset-based Lending at eCapital. “The dedication of our team is evident in our ability to understand and meet the unique needs of each business we serve, allowing them to achieve their goals with custom financial solutions that support their growth. We are proud to have closed out another successful year working alongside such amazing businesses and look forward to continued growth in the future.”
The businesses funded by eCapital ABL North America in the fourth quarter of 2022 include, but are not limited to:
- A $20M facility for the creators of the popular first-of-its-kind bathroom fragrance and other home fragrance products. The company will use the funding to sustain operations through peak seasons and accelerate the business for the future.
- A $35M facility for a manufacturer and distributor of watering products and accessories. Backed by a prominent private equity sponsor, the company will use the working capital from eCapital to support operations across its multiple brands and manufacturing and distribution facilities.
- A $40M facility for one of the largest candle producers in the U.S. Also backed by a private equity sponsor, it will use the line of credit from eCapital to support continued product innovation and expansion among its multiple brand names and private labels.
eCapital ABL responds quickly to a business’ unique and changing needs, whether trade cycles, seasonality, customer base or other critical factors impacting growth. With international reach and expansive expertise in multiple sectors, eCapital ABL is uniquely positioned to support businesses with customized lines of credit that provide maximum flexibility to meet their goals and achieve long-term, profitable growth.
About eCapital Corp.
eCapital is committed to accelerating access to capital for companies in the United States, Canada, and the U.K. By leveraging a team of over 800 experts and proprietary, industry-leading technology, eCapital is creating the future of business funding. With a full suite of products such as freight factoring, invoice factoring, lines of credit, asset-based lending, payroll funding, and equipment financing, eCapital ensures businesses have the funds they need to do more. Through its Transportation, Staffing, Wellness, Healthcare, Factoring and ABL divisions, eCapital delivers customized funding solutions for over 80 industries. To learn more about eCapital, visit eCapital.com.
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