While cash may be king, liquidity is only part of the equation for business success. Although business needs may be unique or complex, obtaining specialty financing doesn’t have to be complicated. For businesses that may not be aware of the options, here are answers to four frequently asked questions:
What is specialty finance lending?
Specialty finance is broadly defined as financing activity that takes place outside of the traditional banking system. More specifically, specialty finance is when regulated entities provide capital to unregulated entities, or non-depositories. Typical clients are business development companies, loan funds or specialty lenders.
Who uses this type of financing?
By gaining access to the right combination of capital, experience and market knowledge, businesses, asset managers and lending organizations can achieve a broad range of goals through specialty finance. Asset sectors that use this type of financing typically include:
- Growth capital lenders
- Transportation asset managers (large-ticket)
- Equipment finance and leasing companies (small and mid-ticket)
- Middle market lenders and business development companies (BDCs)
- Asset-based loan (ABL) providers (senior secured loans)
- Consumer markets (timeshare, home improvement and solar-related assets)
What does a specialty finance lender provide?
Types of services include originations, credit, structuring and analytics, operations, portfolio management and syndications.
Two examples include:
- A $35 million credit facility for Commercial Equipment Finance Inc. (CEFI), an independent commercial equipment finance company headquartered in Puerto Rico.
- A $50 million revolving credit facility for the Oxford Finance Credit Fund I LP, a private debt fund managed by Oxford Finance LLC.
What are the benefits of this type of financing?
By providing a broad range of strategies that encompass myriad business needs, specialty finance lending may help organizations prosper with capital stability, industry expertise and ongoing support at every stage of the business journey.
Provider example: KeyBank Specialty Finance Lending
More than a decade ago, KeyBank saw an opportunity when there were small portfolios that performed well during the recession but there weren’t many lenders with platforms supporting specialty finance.
Rian Emmett, Managing Director and Group Head of KeyBank Specialty Finance Lending, described the past decade - "a very good run" - in an informative podcast interview with the Refinitiv LPC Lender Spotlight Series.
Today, KeyBank Specialty Finance Lending provides a unique blend of boutique services and full-bank resources to meet distinct financial requirements of various asset sectors. As KeyBank clients grow and expand, so do their needs for distinct capital and banking resources. As a centralized source of comprehensive financing strategies, KeyBank also delivers increased efficiencies through derivatives, depository, term asset-based securities (ABS) and capital markets access.
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