Community Banks and ABLs: How We Can Work Together to Serve Your Clients

Businesses struggling to maintain cashflow and working capital needs — whether due to growth, diminished earnings or customer concentration — can find themselves caught in the difficult position of being bypassed by traditional bank lending. For small and medium-sized enterprises (SMEs), securing this critical financing often means the difference between success and failure.

Many community banks, which are essential to local businesses in any community and play an important role in the economy, can provide the best of both banking and alternative financing to SMEs by including asset-based lending and factoring as a product offering, or by partnering with an asset-based lender to provide financing to clients who are not yet bankable due to credit standards.

Asset-based lending and/or factoring can be a lifeline for businesses struggling to make ends meet, helping improve the financial well-being of these clients. “We take a company that is faced with a “capital situation” (financial restructuring, losses, growth, etc.) and doesn’t fit traditional banking credit parameters and incubate them with capital that turns the business in the right direction,” says Mark Simshauser, Senior Vice President, Northeast US at Allied Affiliated Funding.

Partnering with a lender that provides asset-based lending or factoring is a winning solution for any community bank. In a recent article on this topic published by Secured Finance Network, Dan Karas, Executive Vice President at Allied explains three benefits of offering ABL products for a bank:

Maintaining the relationship. “We’ve broadened the product suite such that we can obtain clients at stages such as startups or high growth or financially challenged that don’t fit a community bank’s risk profile…Once the client’s performance improves, they graduate to the bank’s commercial lending group without having to restart the relationship,” Karas says.

Providing a defensive tool for banking clients. When a commercial banking client’s financial performance deteriorates, but they are still acceptable for asset-based lending or factoring, this financing will offer a line of credit defense for the bank to continue aiding the client in cash management relationship products while also protecting the bank’s portfolio.

High yield lending. We structure and deliver stronger yields that are better than traditional commercial real estate or commercial C&I loans, which helps lift the bank’s interest margin.

Community banks, with their smaller local footprint, have the benefit of being more nimble and client responsive than larger national institutional banks, which require many layers of credit approval for business loans. As a division of Florida-based and nationally chartered Axiom Bank, Allied Affiliated Funding helps the bank remain even more agile and market responsive than traditional banking, closing deals and getting critical working capital in the hands of our customers quickly. In addition, Allied Affiliated Funding provides a national, coast-to-coast footprint for Axiom bank, which has 17 branches throughout central Florida.

In Allied, other community banks can find a financing partner that will go the extra distance to ensure you are able to maintain relationships with your clients when it makes sense. Since 1992, Allied has been working with SME business owners structuring the right working capital financing solutions for their companies. Each year, we provide hundreds of millions in funding for clients across the country and in a wide range of industries. We currently partner with a wide variety of banking partners across the nation to provide a highly tailored, turnkey process, allowing our partners to provide an alternative lending solution to their clients.

We can offer interim financing options to your clients, such as accounts receivables financing and asset-based lending, until that client qualifies for a traditional line of credit and you feel it is appropriate to resume the credit risk. When the time comes, we can transition the client back to your institution.

Do you have clients that no longer fit the traditional lending profile of your bank? Consider referring your client to Allied. We will help navigate the transition process, ensuring it is a smooth one for all parties involved. At Allied, we value relationships and will do everything in our power to help you maintain those relationships with your customers until they become bankable again.