The art of the deal

By Heidi Luck, SVP, Asset-based Lending

It is often said that art lies in the eye of the beholder. Perspective also plays an important role in how art is viewed from multiple angles. Crafting the deal takes a lender that has broad experience, knowledge and perspective. The ability to visualize an outcome and the perspective to step “outside the box” are key to creative credit solutions. Your lender should be flexible, creative and willing to take risk by redefining the boundaries of your deal.

Michael Sharkey, president of MB Business Capital and Commercial Finance Association (CFA) past chairman comments ,“In our case, we do not operate with a lot of hard and fast rules. In other words, we don’t always insist that a loan must fit into the ‘box’. We have guidelines that we have developed over the years that allow us to apply principles that have proven to work for us and our clients. We recently began a new relationship with a very well-known and established garden product manufacturing company. We stepped ‘outside the box’ and provided a 100% advance rate on inventory for a short period of time to accommodate their seasonality.“ This gave the company the flexibility it needed and MB Business Capital was comfortable because we took the time to understand the company’s story, operating cycle and industry characteristics.

This company has unique cyclical periods that MB Business Capital was able to get its arms around. Cookie cutter approaches to lending just don’t fully serve the client or their stakeholders.

“We do not operate with a lot of hard and fast rules. In other words we don’t always insist that a loan must fit into the box.” Michael D. Sharkey, President, MB Business Capital
Some lenders have rules in reaction to past credit losses. Your lender needs to tailor your company’s financing solution based on your unique company’s circumstances. An experienced lender will understand that getting “outside the box” allows them to win transactions that may appear to be non-traditional, but are still structurally sound. “We don’t always require an inventory appraisal even if we are lending on inventory. The inventory loan doesn’t always have to be less than the receivable loan,” says Sharkey.

Look for lenders that have tenured and experienced teams, have lent in an array of industries and a lender that is willing to “stretch” the traditional rules to accommodate your unique situation. Ask to hear experiences from their customers and partners, such as private equity groups and investment bankers with which they have done business. Ask for examples of unique lending facilities. An artfully-crafted transaction can result in success for all parties.

A lender’s palette

Your lender should be:

  • Flexible
  • Creative and step “outside the box”
  • Willing to take risks
  • Knowledgeable about your industry
  • Able to “stretch” the rules to accommodate your circumstance
  • Knowledgeable and seasoned