Debt Financing In 2018:
Here Are Your Options
These are the two options for a growing company seeking commercial credit in 2018.
Traditional Banks
While traditional bank financing can be great, emerging growth companies typically cannot obtain traditional bank financing. When a bank reviews a company with high growth, the bank sees risk, but fails to see opportunity. Banks prefer stability to growth, and, as a result, dynamic companies are provided inadequate financing alternatives or no financing at all. In the rare case when traditional bank financing has been made available, it is often insufficient in amount and includes substantial covenant protections, including stringent earnings to fixed charges and financial coverage ratios, and many others.
Alternative Lenders
Alternative lenders are quite different than traditional banks. Alternative lenders are often family offices or funds that have set aside capital to lend to growing companies. Contrary to traditional banks, alternative lenders enjoy working with high growth companies. They provide flexible financing solutions through ABL, purchase order, invoice, inventory, equipment, term loan, and other forms of credit, as well as merger and acquisition finance. Additionally, as they are typically unregulated, they act substantially more quickly and are more nimble with respect to business developments.
Summary
Alternative Lenders
- Covenant free
- Fast approval
- Flexible
- Enjoy working with growing companies
Traditional Banks
- Stability over growth
- Restrictive, covenant heavy
- Slow with regard to approval and business development
We have been fortunate to meet and develop extensive relationships with a large number of the alternative lenders in the United States. If your company is looking for credit financing, we would love to discuss how we can help you secure the best possible financing for your needs. As ClearThink Capital is generally compensated solely by our client companies and generally does not accept referral fees or commissions from lenders, we, unlike our competitors, are highly incentivized to provide access to credit financing on superior terms with limited or no covenant coverage.
