Small business loan provider National Funding is expanding its reach by offering middle-market loans.
Such loans typically range from $250,000 to $1 million.
National Funding hired Todd Stichler as its Director of Middle Market Lending to oversee this growth. Mr. Stichler has experience in middle market loans from his time with LendSpark, a San Diego-based small business loan provider.
“This is huge for our company,” said National Funding CEO David Gilbert. “We see a lot of opportunity in the market.”
Prior to this expansion, National Funding was mostly working with companies generating under $2 million in revenue, Mr. Gilbert explained. Companies with higher revenue totals, especially those north of $5 million are looking to borrow larger amounts
“We didn’t really have a good product for that marketplace and we had customers calling in asking,” Mr. Gilbert said.
National Funding has an idea of where some of those customers will be coming from. Manufacturing companies, and firms from niche industries who are becoming bigger players in their sector will be attracted to middle market loans.
“We’re working on the product to offer them flexibility,” Mr. Gilbert added.
National Funding currently offers mostly daily payment loans which are collected on a daily basis. As more of a weekly product, middle market loans allow National Funding to appeal to a greater range of cash flow patterns.
“Some people prefer daily payment loans because they have so many deposits a day,” Mr. Gilbert explained. “Some people come from industries where they only have one deposit a week and some only have one a month. This provides them with a little more flexibility.”
National Funding’s growth also allows them to work with companies who have an existing relationship with other financing sources by providing funding options those firms either do not have or do not wish to provide, such as short duration loans.
“We have a lot of construction companies looking for gap financing,” Mr. Gilbert explained. “They may be working on a big financing deal and need an extra 120 days to get that deal done. We’ll work with that bank to provide that patch or bridge financing. We play a big role there.”
News from the United Kingdom has banks which turn down small business loan requests having to refer them to alternative lenders. Does such a move make sense in the United States?
“We’re already seeing some of that from different alternative lenders in the space,” Mr. Gilbert said. “I know Lending Club and OnDeck have a lot of strategic bank partnerships so that is working already.”
“I think the government plays a big role in the lending world with how they spur the economy from a business perspective. I don’t see them getting more involved. They would help with tax incentives for business.”
While the business community knows an initial rate hike will have to come eventually, many feel the later the better. “The Federal Reserve delaying interest rate hikes has helped everybody,” Mr. Gilbert said.
Many have become overly accustomed to easy money and are getting skittish about the effect of the inevitable hikes. Is there anything the Fed can do to soften the blow?
“I think they eventually just do it,” Mr. Gilbert said. “The concern is more the timing and size of the hikes.”
Low gas prices continue to benefit transportation-reliant companies, Mr. Gilbert added.