Once Out of the Coronavirus Crisis, Banks Will Tighten Up On Lending
As the recession deepens, and we get past the government-backed SBA lending program, banks will tighten up on lending; they always do during a recession. So if you own a business that is struggling during the lockdown or growing as a result of the crisis, bank financing will be difficult. Business owners on either end of the spectrum should now be asking themselves if their lender will stick with them going forward or do they need to prepare an alternative.
There’s nothing wrong with looking for a new lender during the crisis as long as you have a sense of where your business is going. Take stock of the trends you’re seeing in sales and collections and how your customer base is faring. Are they in lockdown? Are they struggling, growing? How do you see their situations affecting your business?
If you don’t feel secure that your current lender will stick with you, it’s better to start looking for an alternative lending source before you’re shown the door. Banks aren’t paying attention now but as soon as the government programs end, they will be.
Most asset based lenders (the most likely source to which bankers refer when they ask clients to leave) are gearing up for an onslaught of referrals in the third quarter. If you feel you could be one of those referrals, it might be a good idea to talk with an asset based lender yourself, now; just to see what your options may be. Now more than ever scouting’s motto “Be Prepared” is exceedingly relevant.
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.