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Two months ago we discussed the questions that lenders should be asking their borrowers as borrowers were beginning to finalize their June 30, 2020 results and report the initial impact of the Covid shutdown and the CARES Act program funds. With the end of August around the corner, the second quarter results and even July 2020 results are available.

It is time to consider updating and expanding discussions with borrowers looking toward the remainder of 2020.

The outline of questions is a guideline to facilitate a discussion focused on the thought processes the business is going through and the financial impact over the past few months and into the future. Open ended questions that encourage a discussion are the most important tools lenders can use to understand their borrowers and the impact of the Covid-19 situation.

D.A. Davidson & Co. acted as financial advisor to Pacific Premier in the transaction and delivered a fairness opinion to the Board of Directors of Pacific Premier. Holland & Knight LLP served as legal counsel to Pacific Premier. Piper Sandler & Co. acted as financial advisor to Opus and delivered a fairness opinion to the Board of Directors of Opus. Sullivan & Cromwell LLP served as legal counsel to Opus.

Santander Bank announced that it closed the following deals:

•            A $142 million deal with WEX Inc., a ME-based financial technology service provider. The deal will support WEX Inc.'s acquisitions of Noventis, a provider of bill and invoice payment delivery, and Discover Benefits, a provider of employee benefits administration.

•            A $120 million deal with The Eastern Company, a CT-based industrial metals products manufacturer. The deal will support The Eastern Company's acquisition program and aid in its purchase of Big 3 Precision Products, Inc., a turnkey packaging solutions provider. 

The Q3 2020 Asset-Based Lending Index reflects improving confidence for lenders, fears of a double-dip downturn subsiding, and exhibits the continuing impact of PPP funds distributed in April. The U.S. economy rebounded during Q3 as lockdowns subsided, leading to a GDP surge of 33%.

This growth had a clear impact on portfolio health with non-accruals, special mention, and write-offs reducing quarter over quarter.

TSL: Congrats on your 10-year anniversary! Scott, what would you say are the biggest changes Gibraltar Business Capital has undergone over these last 10 years?

Scott Winicour: Thanks! It’s been a wild ride these last ten years, but probably the biggest change is when I bought the company from my father ten years ago with the help of private equity. It was a very small, regional player in the factoring space that did average-sized deals of $50,000 to $250,000. One of the biggest changes today is we don’t really do any factoring anymore, and that’s because we’ve morphed into an asset-based lender as opposed to a more traditional factor.  Another big change is that we now have a nationwide presence.  So, we went from a small, localized factoring-only business to a national brand name that people know, with salespeople all across the country. That is, by far, the biggest change.

People's United Bank, N.A. a subsidiary of People's United Financial, Inc. (NASDAQ: PBCT), has expanded its Commercial Specialty Business with the formation of a dedicated Lender Finance team. The team will be led by Patrick Lee, Managing Director, Head of Lender Finance, Asset-Based Lending, and be an extension of the Bank’s existing Asset-Based Lending group.

MUFG Union Bank today announced that Anvar Hodjaev has been named Head of Healthcare for its Commercial Banking division. Based in Los Angeles, he will lead the bank's Healthcare industry team and report to Adam Feit, Managing Director and Head of Financial Sponsors, Healthcare, and Life Sciences.

"Anvar brings a wealth of experience and expertise to a crucial business for MUFG Union Bank," Feit said. "As half of our lending commitments come from industry specialties, we continue to lean into our ability to leverage the combination of both local coverage and specialized industry expertise in critical individual sectors for our clients."

On March 27, 2020, Congress approved the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).  The CARES Act includes extensive provisions to address the current public health crisis, including, among other things, $349 billion of commitments for general business loans under Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) through June 30, 2020 under Title I of the CARES Act, titled “Keeping American Workers Paid and Employed Act,”  which sets out the terms for the “Paycheck Protection Program.”

The Paycheck Protection Program has been of particular interest to members of Secured Finance Network because it provides potential interim financing for small businesses that are typical borrowers from many member lenders.

Following up on the description in the articles above here are answers to some frequently asked questions from members of the Secured Finance Network.

SLR Business Credit announced it provided a $2,500,000 asset-based revolving line of credit to a producer of high-quality fresh and frozen meat.

When a group of investors with industry experience found the opportunity to purchase a Midwest producer of high-quality fresh and frozen ground meat out of bankruptcy via a 363 sale, they turned to their community bank.

PNC Bank, National Association, announced today the closing of a $42.38 million senior secured credit facility for Madison-Kipp Corporation (MKC), a portfolio company of Dallas, TX-based Trive Capital. PNC Bank, N.A., served as administrative agent.

Modell’s Sporting Goods. America’s oldest family owned and operated retailer of sporting goods, athletic footwear, active apparel and fan gear, today announced that the Company has voluntarily filed for relief under Chapter 11 of the Bankruptcy Code (“Chapter 11”) in the U.S. Bankruptcy Court for the District of New Jersey on March 11, 2020.
“We are extremely appreciative of the support that our lenders (JP Morgan Chase and Wells Fargo), vendors and landlords provided during this difficult period, engaging in extensive renegotiation efforts and allowing us to pursue every possible avenue to preserve the jobs of our loyal associates..." Modell’s Chief Executive Officer, Mitchell Modell, said.

Rosenthal & Rosenthal, Inc., the leading independent factoring, asset based lending and purchase order financing firm in the United States, today announced the appointment of Leigh Lones as Senior Vice President, Southeast Regional Sales Manager, and Al Foster as Vice President, Business Development Officer. Lones will be based in the Atlanta office and Foster will operate remotely out of Tennessee.

Citizens announced today that it has provided a new asset-based revolving loan to Warminster, PA-based W. Atlee Burpee Company. Citizens is the sole lender.

Founded in 1876, W. Atlee Burpee Company is engaged in the wholesale distribution, direct marketing and retail sale of vegetable and flower seeds, plants, horticultural and other related products.

Northbrook-based private equity firm plans for succession

Big Shoulders Capital Chairman David Muslin has announced an expanded leadership team as the company plans for the next generation of growth. Joe Prudden has been promoted to President of the company from Chief Financial Officer, Alex Mazer is promoted to Executive Vice President from Vice President, Howard Spivack is promoted to Chief Financial Officer from Finance Director, and Evan Zwerman joins the company as Senior Vice President of Originations.

What are some effective ways to approach management regarding the sensitive topic of compensation, particularly as it relates to peers in the same role, and also within the current overall market?

It is not everyday that you are given an opportunity to live out the career you would have in an alternate universe, but that is exactly what happened to me, thanks to the SFNet Guest Lecture Program and SFNet MidWest Chapter President Jennifer Kempton, who kindly asked me to be the Guest Lecturer.   

Last month, Sarah Fyffe, vice president, Asset Based Lending, BMO Harris Bank, and I were able to virtually present ABL 101 to Professor Gregory Udell’s Entrepreneurial Finance Class at Indiana University on April 5.  It was without a doubt one of the coolest things I have ever done in my career and I am so grateful to have been involved. Education and mentorship are my favorite part of the job and, to do so in a university setting, was an incredible experience.  For Sarah, it was a chance to lecture to a classroom where she once sat as a student in Professor Udell’s class.  Talk about coming full circle!

JPMorgan Chase Bank, N.A., Citi and TD Securities are acting as lead arrangers and active bookrunners for the Senior Secured Credit Facilities.