As times and financial regulations change, banks aren’t the only game in town for financing. New players from brokerage houses to insurance companies are entering the money-to-lend market at a record pace. As this competition increases, business owners will benefit from lower rates and better terms.
Working Capital Lines – Merrill Lynch was one of the first brokerage houses to recognize the opportunity in providing working capital lines of credit to businesses with other brokerages following suit. However, be sure to read the fine print and understand the fees when making comparisons to traditional bank lines.
For receivables support, factoring companies offer an alternative to bank financing. With factoring, you usually sell your receivables to the factor company and they handle the collection. In this way, you get the cash in the door much more quickly. Most factoring companies, however, are far more expensive than collecting your own receivables.
Project Financing – If your company is growing with considerable real estate assets, insurance companies can be an excellent source of mortgage debt. In order to play in this market, you should have total loans of $10 million or more. Smaller deals can be done but are usually not cost effective.
In the insurance industry, you will find a myriad of brokers wanting to handle your transaction. They are essentially middlemen who will take either a fee or a mark-up or both on your final mortgage. It is more cost-effective to go direct. To get names and numbers of contacts within this industry, check with a regional or national bank’s real estate department in your area They usually know which insurance companies are in the mortgage investment mode.
For trucks, equipment and individual store financing, leasing companies offer good alternatives .
In summary, the next time you need money, remember “non-banks” when you are looking for a new lender. A non-bank lender may be your best alternative.
