When Your Commercial Lending Relationship Ends: Tips for Finding an Alternative Lender
Founder & CEO
Lending relationships with traditional commercial banks can be challenging. One day your loan process appears to be in order, the next your lending relationship is ending due to tightening bank standards. The timing of this situation can be stressful, especially when economic conditions are unstable and a potential recession is looming. For businesses relying on their commercial bank’s services, this can feel like a crisis.
What Might Cause a Commercial Lending Relationship to End?
When a borrower faces difficulties with their lender, despite being current with payments and having a healthy financial standing, it could be due to restrictive covenants.
Recessions and economic dips can pose significant difficulties for business owners. As commercial banks tighten their standards to mitigate risk, the likelihood a business will trip a covenant exponentially increases due to reduced income and shrinking cash flows. Higher interest rates limit mid-market businesses’ access to working capital and traditional loan options. This can create a vicious cycle for struggling businesses.
Finding a non-bank lender for your loan request could be the answer. Non-banks provide businesses with quicker funding, larger loan amounts and more flexible standards.
The World of Non-Bank Lending
In today’s lending space, business owners have an extensive range of borrowing options available beyond traditional commercial banks.
Cerebro’s team of experts have collected real-time market data that shows a trend towards non-traditional financing options, with non-bank loan demand increasing.
For many mid-size businesses, the advantages of working with non-bank lenders are hard to ignore. Non-bank lending options offer greater flexibility in the qualification criteria and less stringent covenants.
Advantages of Non-bank Lenders
- Not regulated by FDCI
- Larger loan sizes
- More flexible structures
- Less onerous covenants
Common types of Non-Bank Lenders
Securing capital is quicker and easier in the alternative lending world. This truth is becoming increasingly evident to many underserved mid-sized businesses who are tired of struggling to meet traditional lenders’ strict and inflexible criteria.
An Extensive Marketplace of Non-Bank Lenders
Cerebro Capital offers a comprehensive range of non-traditional funding solutions for mid-size businesses. In the event of unforeseen economic forces that trigger covenants and a notice of termination from a traditional lender, businesses need not despair. Cerebro’s lending marketplace matches businesses with alternative lending options that help them adapt to changing circumstances.
Cerebro Capital works with thousands of borrowers connecting them to lenders from over 1,500 lending institutions to provide loans ranging from $1 million to $100+ million. It takes 15 minutes to find your perfect lender matches, so start your journey here to connect with our team experts.
The world of middle-market lending has changed. Before COVID-19, traditional lenders showed flexibility as they worked to expand their books of business.
Increase the Chances of Closing a Loan
Significant disruptions to the lending landscape in the past four months have left corporate borrowers scrambling to stay on top of changing requirements
CFOs need to be constantly aware of how their company’s financial performance and market shifts affect its debt capacity, which is the best measure of your business’ ability to borrow.