Bank Participations
At Celtic Capital, we’re always open to the idea of participating with banks on deals; for a few reasons. From our point of view, participations are good for borrowers because we can offer a blended and, therefore, less expensive rate. And, participations are good for banks in a couple of scenarios:
- When a bank has a borderline company it doesn’t really want to exit. The company just needs a bit more oversight than the bank can provide.
- When a bank has a prospective customer, but it needs to see a more positive trend from the business before the bank will take it on.
When participating on a deal, banks can lock up the banking side of things, get a piece of the lending relationship and get the balance of the loan when the bank is ready to take a company on in full. For larger banks, participations reduce their lending risk, increase their capital base and create liquidity enabling them to take advantage of other lending opportunities. For smaller institutions, participations help reduce lending risk and increase their deposit base.
With both borderline clients and non-bankable prospective clients, banks need to take the perspective that while the company may not be ready for the bank now, we don’t mind having some money in (participation) because Celtic Capital will be closely monitoring the deal. And if the trend goes negative and the bank wants out, Celtic Capital can pay us off. For this to work, though, banks need to fit this thought process into their rating system so that a deal qualifies on a participation basis, not on a direct loan basis.
If you’re interested in deal participation with Celtic Capital, contact Mark Hafner at 310.664.4860 or mhafner@celticcapital.com.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.
If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.