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Equipment Leasing & Working Capital Lending: A Winning Formula

Date: Aug 18, 2015 @ 07:00 AM
Filed Under: Industry Trends

The primary lending models are balance sheet, marketplace and brokerage.  The balance sheet lenders have access to committed funds and underwrite to hold the loans for their own account. This group includes firms like OnDeck, CAN, QuickBridge, National and our firm, Channel Partners Capital. Marketplace lenders (also referred to as peer-to-peer) have developed elaborate loan placement technology backbones that allow them to fund and manage a portfolio of loans, for a fee, on behalf of multiple individual and institutional investors who actually buy the yield and the risk of the loan from the marketplace lender, who continues to service the loan on behalf of the investor. This group includes firms like Funding Circle, DealStruck and Lending Club. The third group provides enhanced loan packaging and credit provider search tools for individual borrowers for a fee. This group includes firms like Lendio, Fundera and BoeFly.

The rapidly expanding market for working capital is expected to experience loan originations growth rates in the high double digits over the next several years. The working capital market, at well over $5 billion in annual originations, has become too big to ignore and represents an attractive fee income opportunity for any firm that deals with small business. As previously noted, when your customers are growing and have increased access to working capital more lease opportunities will come your way.

Can you and your business capitalize on the emerging market for small business working capital loan products?  As a leasing professional you know that the economics of the small business leasing model depend on meeting the equipment needs of the same broad and diverse small business customer set. Most of the fintech working capital lenders and the entities they are affiliated with are going after the same prospects through active direct marketing campaigns. Historically, many leasing professionals have been appropriately cautious about working capital products. Many of you have been even more cautious about connecting your customers to a fintech lender that has product strategies that may include disintermediating you from your customers, not just in the working capital product category, but potentially from your core leasing solutions.

The equipment finance industry is responsible for over $900 billion in financial assets within the U.S., 33% of the industry is made up of micro (less than $25,000) and small ticket ($25,000 - $250,000) finance. This part of the industry has unique access to small business borrowers.  Approximately $60 billion of that market is controlled by independents within the leasing value chain and these lease brokers and lessors control the bulk of the all-important “point of sale” interaction with these small businesses. There is a substantial and growing unfilled demand for the easier access working capital loan products that address your borrower’s needs and can help your leasing business grow. These customers are being solicited directly by other providers while you are currently in the best position to advise and direct them to an important financial solution.

It is your choice to ask: “Do you have working capital needs?”

Bryan J. Mitchell
Financial Advisor | Channel Partners, LLC
Bryan J. Mitchell has over 25 years of executive experience leading and advising both public and privately held specialty finance and financial services companies. He has provided corporate development advisory, consulting and capital raising support to privately held Channel Partners, LLC since October of 2014. Channel is part of the rapidly growing non-bank financial services sector that is commonly referred to as marketplace lending.

Mitchell co-founded and has served as CEO, President and Board Member of several financial services firms during his career including privately held TowPath Renewables, founded in 2010 and focused on utility scale renewable energy tax equity and publicly traded MCG Capital, a middle- market commercial finance firm which he founded in 1998. From 1988 through 1997, he founded and developed MCG’s predecessor businesses while serving as Vice President and Senior Vice President for Signet Bank and First Union Bank. Mitchell created (1990) and transitioned the highly profitable intellectual property lending business into a private equity backed commercial finance company (1998), then into a publicly traded registered investment company and BDC (2001) that grew into a Russell 2000 listed $1 billion+ financial institution (2005).

Prior to his current work with Channel, Mitchell had been engaged in outsourced corporate development, consulting and advisory work for a number of high profile clients in the banking, asset management and specialty finance industries.

Channel Partners Capital is the only fintech balance sheet lender that focuses exclusively on partnering with the leasing industry. The firm was founded and is run by leasing professionals with no direct to borrower customer acquisition strategy. Channel Partners has been originating small business working capital loans since 2009 and has originated over 3,000 small business loans totaling over $150 million in volume, all exclusively through equipment finance and leasing industry partnerships.
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