That is the question for most small, community banks. Small businesses and banks are both frustrated by the tight credit standards for new loans.
The banks cannot afford to make questionable loans, yet want to preserve the established relationship with the borrower. Companies at a critical juncture need a credit facility for working capital, yet find their current bank is no longer an option.
There is a possible win-win solution to this puzzle: a third party, asset based lending.
A good asset based lender can provide benefits to both parties. These lenders focus on collateral verses profitability and have greater flexibility in underwriting a loan.
The borrower wins, raising capital needed from a closely involved lender. The bank wins, preserving the relationship in the form of continued service in other day-to-day banking products. Further down the road, when the challenges to the business have been resolved, it is likely they will return to their bank for their liquidity needs.
By taking the lead in referring businesses to a third party ABL, the bank not only maintains control of the relationship with their client but, can actually be helpful in screening and protecting them from predatory lenders.
There are many legitimate asset based lenders with cash to loan. An accredited broker (always make sure to thoroughly check references and BBB accreditation) will have established relationships with and access to a large number of these and so can address the concerns of both the borrower and referring loan officer. They will provide a pool of lenders that are reputable and customized to everyone’s needs, ensuring that trust is maintained throughout the process.
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