In The News

 

10 14 2014

10 14 2014

National Funding gets $50 million boost

National Funding has secured a significant capital boost which will allow it to become a much larger player in American small business loan provision, following the confirmation of a $50 million loan and security agreement with Pacific Western Bank subsidiary CapitalSource.

A provider of such products as equipment leases, short-term working capital and bridge loans, National Funding states the new capital will allow them additional flexibility to capitalize on marketplace opportunities, increase their marketing and invest in new products.

National Funding CEO David Gilbert said he was attracted to working with CapitalSource because of their openness to new ideas in what can be a very staid business sector. Mr. Gilbert said he had seen CapitalSource working on a partnership with non-traditional small business lender Kabbage so he knew they were receptive to creative financial products. “They were very flexible and they looked at the products we wanted to do.”

The announcement is but one of many such actions made possible by traditional large bank reluctance to lend to small business. A National Funding-commissioned study found that nearly half of small businesses that sought financing could not get it from a traditional bank. This aversion has created opportunities for players like National Funding.

“This is a newer space for banks to be in,” Mr. Gilbert explained. “They have a longer learning curve of understanding where the opportunities are and what the risks are. It creates more exposure.”

Given the record ages of American industrial equipment there is soon going to be a rush of companies looking for equipment and other forms of financing and when they do, many of their searches will not end up at a bank. National Funding is perfectly positioned to respond to this void.

“There is plenty of pent-up demand,” Mr. Gilbert said. “Companies that used to replace equipment every three years are now waiting five years. They were waiting to invest more until they were sure. Look for them to take a more active role.”

With 25 percent of all loans being for equipment, what affects a company’s decision to lease instead of buy?

“It depends on the purpose of the equipment,” Mr. Gilbert explained. “If it’s for a short-term purpose, companies are better off leasing. But if they plan on using it for a longer period, they should buy.”

Another point of differentiation National Funding seeks to exploit is customer service. Given the rush of companies seeking a foothold in online lending, one would think customer demand for in-person service is in a free fall, but that is not completely accurate, Mr. Gilbert said.

National Funding commissioned a study from Northwest University’s Kellogg School of Management’s Experiential Learning Initiative which revealed some interesting results.

“Despite great interest in strictly online alternative lending, many business owners still desire personal interactions with financial providers that will take the time to discuss business challenges and solutions,” Mr. Gilbert said.

They also found 44 percent of all loan applications were completed at the bank, never mind the consulting and product discussions on site that would push that percentage of loan seekers spending time in bank much higher.

“Our average customer is in their 40s,” Mr. Gilbert said. “People in their 20s and 30s are more comfortable online and the concept of a completely online process is embraced only by younger business owners.”

That does not mean the interwebs takes care of everything for the study found that while even the best online platforms help with conversion, they do not significantly influence lender choice.

There are limits to the effectiveness of online lending, areas which can be easily trumped by effective, in-person customer service.

“Small businesses are are so customized in their needs,” Mr. Gilbert said. “Take the different needs of construction companies on the east and west coasts.”

Another is awareness of alternative financial products, which Mr. Gilbert says many consumers are not yet aware.

Not that those desiring the personal touch will shop around. The research also found most owners will use the first lender they meet, meaning word of mouth, excellent customer service, and even physical location are key factors for any company competing in this space.

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Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.