Deciding on a lending partner doesn’t have to be daunting — especially if you’re equipped with the right questions and understanding of what to look for in a trusted partner.
To provide a personal look about how to navigate this process, Anthony DiChiara, GBC’s EVP and Head of Sales, provided an insider’s take at how to approach working with an asset based lender. This includes what questions to consider, and how borrowers should navigate the partner decision process.
What is one of the best use cases for asset based lending?
Asset based lenders are particularly helpful when a company needs to scale its working capital or financing needs and a traditional lender can’t provide the flexibility or additional working capital. Asset based lending scales based on a company’s collateral base and that can be particularly valuable during economic or seasonal fluctuations in a company’s performance.
What question should borrowers be asking potential lending partners?
As potential borrowers are entertaining new lenders, you should always ask: “what does your credit process look like?” Look for full transparency, and ensure they have a pulse on your business model. There are a lot of lenders out there that don’t invest enough on the front end and don’t learn enough about the business — and that disconnect translates to their credit committees and the people who are going to be making the decisions in the organization.
If you get a term sheet from a lender, you should ask who was involved in vetting and approving the proposal. At GBC, we don’t issue term sheets without full approval from our credit committee.
Want to learn more from Anthony DiChiara about what sets Gibraltar Business Capital apart and considerations for choosing an asset-based lending partner and relationship? Check out his full video below.
What’s one core quality to evaluate when balancing the financing needs of your organization against choosing the right partner?
At GBC, we view relationships as a big differentiator in the market. Relationships, above all else, are the core of any successful financing relationship. No matter how many changes a company goes through, what should remain constant is the commitment from partners on both sides of the equation. Lenders must understand how to navigate changes as they occur. Leadership starts with showing there are real people behind a brand.
The credit team and credit decision-makers should be easily accessible in any relationship. You must know who you have in your corner. Smaller teams give better access to decision-makers, which is extremely important in an ABL relationship — especially during periods of rapid transformation, or economic changes. Any lending partnership is about far more than just the capital. A partner who asks the right questions, through its various business cycles, is pivotal to short and long-term success.
At GBC, we are a very streamlined organization. We are smaller, and can execute very quickly. Our clients see value in the fact that they have direct access to our decision makers. They have the ability to have their requests answered really quickly. Our clients get a level of visibility into our organization that most lenders don’t provide.
What are a few core differences between ABL and traditional lenders around diligence and reporting requirements?
ABL is built to scale with your needs, but there are operational differences between how ABL and traditional lenders work. Most asset based lenders require reporting and reconciliations to understand cash flows and working capital changes in detail. This level of detail helps establish the foundation for streamlined reporting down the road. ABL is also equipped to adapt to the many changes most businesses require today, and the right lender is equipped to provide responsive and innovative financing solutions along the way.
Ready to explore an ABL or learn more about these topics? Gibraltar is ready to develop responsive and innovative solutions to your financing needs. Click here to set up time to talk to a member of Gibraltar’s professional and experienced sales team.