There is no denying that banks seek to serve their customers appropriately and effectively. However, there is a stark reality at play here, as well. Sometimes, a bank may have credit requirements that go beyond what the SBA policy calls for. Therefore, they are not able to approve a loan simply because they are part of the Small Business Administration’s Preferred Lender Program (PLP), which carries the ability to process, underwrite, approve, and deny SBA loans.
On the flip side of this, some lenders are not PLP certified, which means the SBA will take a much more active role in underwriting an application, and the approval process can be significantly longer.
This, ultimately, is where Filmore Capital recently played a key role. A banker was unable to assist a client with a financing request for a $3.9M SBA business acquisition loan due to the bank’s enhanced credit requirements and had to decline the request. The banker turned to Filmore Capital for help in an effort to still assist and retain the client’s deposit and treasury relationship—and ensure their satisfaction.
In this case study, we will examine the challenges that were faced and the solution that Filmore Capital was able to deliver.
Some Unique Challenges
In this situation, some interesting challenges were present, which included:
- The borrower had a $500K equity injection that was from a non-guarantor investor.
- $3.1M of the assets that were being purchased were goodwill. Now, in this regard, it’s important to note that the SBA doesn’t limit goodwill—but the bank’s policy did.
- Finally, 50%+ of the borrower’s customer concentration and accounts receivable was held by one key client, which was viewed as high-risk by the bank.
Filmore Capital analyzed the situation and sought out a lender that had more flexibility in their SBA policy. And we were able to find a solution that was beneficial to the borrower.
Filmore Capital Utilizes a Deep Lending Network
Based on intimate knowledge of the lending markets and trusted lender relationships, Filmore Capital was able to submit the SBA business acquisition loan application to the right partner. The more flexible SBA lender did not require a banking relationship, which allowed the referring banker to retain all deposit and treasury management revenue associated with the client. Additionally, the loan itself featured no prepayment penalty, enabling the borrower to refinance the debt as their company profile improved.
It was truly a win-win for both the borrower and the banker, and Filmore Capital provided a strategic lending solution. The borrower was able to realize their business acquisition goals, and the banker retained a key relationship as well as valuable bank revenue—of course, with the promise of potentially helping the borrower in the future as their business improved!
Do You Need a Home to Refer Your SBA Declines?
If so, Filmore Capital would love the chance to be your partner. We work with commercial business bankers every day and can effectively service your SBA declines while helping you keep your customer relationship in the process. We are skilled in sourcing bank and non-bank financing solutions for commercial real estate (CRE) and operating companies.
If you are interested in learning more about how Filmore Capital can help you, reach out to our team today and schedule a consultation. We look forward to the opportunity to collaborate!
