Banks + ABL Fuel Reciprocal Deal Flow

Key Takeaways

• Bank-ABL synergy creates long-term pipelines of profitable business.
• Asset-based lending (ABL) complements traditional banking by financing clients who don’t fully qualify for bank loans.
• Referral partnerships ensure clients receive growth financing without leaving their primary bank.
• ABL financing can support both distressed companies and healthy businesses seeking higher borrowing capacity.
• Banks retain deposits and relationships, while ABL financing provides flexible working capital solutions.

Bank-ABL Synergy: Driving Business Pipelines That Last

In today’s evolving lending environment, banks and asset-based lenders (ABL) are discovering powerful synergies that extend far beyond one-time deals. While banks traditionally focus on creditworthy borrowers, asset-based lending provides a flexible financing alternative for businesses that fall outside standard underwriting guidelines or that simply need more borrowing capacity than a traditional loan allows.

Rather than competing, banks and ABL lenders complement each other, creating a win-win system where clients, banks, and lenders all benefit.

Understanding Asset-Based Lending (ABL)

Asset-based lending is a financing structure that leverages a company’s assets (such as accounts receivable, inventory, equipment, or real estate) as collateral. This differs from traditional bank loans, which primarily rely on cash flow and credit quality.

Because of its collateral-driven approach, ABL often steps in where bank financing leaves off, helping businesses that:

• Don’t meet strict bank underwriting standards.
• Need greater flexibility during periods of growth.
• Face temporary challenges but have strong underlying assets.

Why Banks Partner with Asset-Based Lenders

Many banks own in-house ABL subsidiaries to service these types of clients. But not every bank has that capability. In those cases, banks often partner with independent ABL firms to ensure their clients have access to needed capital.

This partnership allows banks to:

• Retain core deposit and treasury management services.
• Strengthen client relationships by offering financing solutions outside their own credit appetite.
• Build trust as a long-term financial partner, not just a lender.

Breaking the Misconception: ABL is Not Just for Troubled Companies

Too often, asset-based lending is seen as a “last resort” for distressed businesses. While it certainly provides lifelines to companies navigating financial challenges, ABL is equally powerful for healthy, growing businesses.

For example:

• A company may outgrow its traditional credit line but still have strong receivables and inventory.
• A banker, instead of risking losing the client to another institution, can refer them to an ABL partner who will provide the additional financing.
• The bank retains deposits and services, the client receives additional capital for expansion, and the ABL provides the needed capital.

This synergy keeps clients within the bank’s system while fueling growth opportunities.

Building a Sustainable Business Pipeline

The real power of Bank-ABL synergy lies in the pipeline it creates. Banks and ABL lenders do not compete or overlap; they serve different functions in a company’s financial journey. Working together strategically, they can continually pass deals back and forth depending on where the client stands in its business cycle.

• Banks benefit from retaining long-term relationships and deposits.
• ABL lenders benefit by financing deals that banks cannot or will not take on.
• Clients benefit by gaining flexible capital solutions without changing financial partners.

This creates a sustainable, ongoing pipeline that can generate business opportunities for years to come.

A Collaborative Future

Banks and asset-based lenders thrive not by competing, but by collaborating. The ability to refer clients, whether to an in-house ABL division or an independent ABL partner, ensures companies have access to the right financing when they need it.

In turn, bankers who embrace these synergistic relationships position themselves as trusted advisors, capable of retaining clients, growing deposits, and driving new opportunities well into the future.

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 more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset-based financing solutions from $500,000 to $8 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 celticcapital.com.