The credit market is still feeling the aftershocks after the collapse of the major banks and lending institutions in the US sent the economy into a downward spiral. Big business and big banks got bailouts and incentives, while liquidity continues to be scarce and incredibily difficult to access for small and medium sized businesses.  Even good companies continue to get get turned down for the credit needed to expand or simply stay afloat. 

 Big banks are still somewhat in lock-down.   Not only are they hesitant to extend new loans to small to mid-sized businesses, but they are dumping existing troubled loan portfolios in an effort to shore up reserves and clear the books.  The outlook for small banks looks equally as bleak: recent reports indicate that hundreds of small banks are expected to fail over the next few years which will prolong the credit problems.  Unless small to mid-sized companies can find financing, this segment – the backbone of our economy – will not be able to grow, create new jobs and fuel our economic recovery.

 Increasingly, this segment has turned to the so-called “alternative lenders.” They have been inundated with loan requests and have become the new mainstream lending source for small to mid-sized companies in trouble.

 At a recent Commercial Finance Association (CFA) convention these so-called alternative lenders spoke about the amount of client applications they are reviewing and rejecting. They have a finite amount of cash to deploy and are forced to be much more selective about which deals they are going to do.  They are taking a much harder look at every company and every situation before making a decision to lend.

 In this competitive borrowing environment, it is imperative that businesses seeking liquidity have wider access to multiple sources of capital. A third party can create market competition for clients, typically resulting in the opportunity to review multiple term sheets and the ability to negotiate the best terms and conditions.