LEASING & FINANCIAL SERVICES

Reprinted from the June 2002 Issue

Neither a Lender Nor a Broker Be:

Finance Agencies & Debt Funding
In a debt funding landscape filled with apprehensive lenders, frustrated brokers and empty-handed borrowers, the
finance agency approach has emerged as an effective means to meet the needs of borrowers and lenders alike.

BY CHERYL KAIDEN

urvey the debt funding market today and you’ll find appre- than the more oft used “shot-gun” approach, common to most small

S hensive lenders, frustrated brokers and a lot of empty-

handed borrowers. The fact is today 90% of all debt financing
requests made by middle market companies are declined. In a tight
loan brokering operations, a finance agency will carefully target
lenders for best fit.

credit market with application volume high, credit approvals low, and
the reliability of financial statements questioned, shopping deals
without advance credit analysis and an insider’s edge won’t work.
Managing borrowers’ expectations in the midst of an uncer-
tain economic environment adds further challenge. The loan
proposal process bewilders borrowers, and lenders are frustrated
by their inability to help clients when their request doesn’t fit inside
the “box.”
A new and innovative approach to obtaining debt funding has
emerged during the last year that is meeting the needs of lenders
and borrowers alike: the debt finance agency.
Diligence First, Propose Later
“Our philosophy is ‘there are no short cuts,’” explains Prima-
gency CEO, Steve Lebetkin. “We roll up our sleeves and do the work
— comprehensive due diligence — before we ever bring borrower
requests to market.” This approach forms the foundation of the firm’s
unique “diligence first, propose later” process.
The pre-proposal due diligence process enables the firm to iden-
tify — before the deal is ever proposed — any collateral, cash flow,
or cash availability shortfall issues that may affect or impede a loan
closing. This invaluable step is no less than game changer. It gives
borrowers the opportunity to rectify issues of concern and revise

Changing the Face of Debt Funding

Imagine applying for insurance without Rapid advances in technology have strengthened
the help of a commercial insurance agency. operational efficiencies, but have also weakened the reliable
Where would you begin?
Consider the enormous amount of
and long-term relationships traditionally established
time and money that would be spent between business customers and their lenders.
sorting through hundreds of insurance
companies and thousands of options to
ensure business risks are covered. Fortunately, it’s a process that requests before the market is even aware the company plans to make
businesses navigate with the help of experienced, knowledgeable a funding request.
agencies. These insurance experts help identify the right insurer Responsible for introducing the agency concept to the finance
and the best options for a particular company, and virtually guar- market, Primagency also uses an approach, which in essence guides
antee policy approval. the lender thereby adding further value to the process. This approach
Now, imagine that kind of agency assistance — and approval is designed to tailor the deal process to each lender’s specifications,
odds — in finding the right home for a fully vetted funding request. literally creating a formal credit memorandum in each lender’s format.
A finance agency plays much the same role as AON and Marsh “This customization makes the lender’s job easier, typically putting
in the commercial insurance market: a reputable, well-established Primagency proposals on the ‘top of the pile’,” said Lebetkin. “It also
and experienced company, expansive resources, purchasing enables lenders to confidently issue meaningful proposals and dramat-
power, and integrated resources across multi-disciplinary lines of ically reduces the overall funding process timeline.”
business. Like brethren insurance agencies, a finance agency will "Making fully informed funding decisions in a shorter time frame
actually underwrite the loan before going to market. And, rather is a value every member of the lessor community can use," says

Page 1 of 2 Specialty Lending Supplement — June 2002

Mark Forsyth, Vice President for the Equipment Finance Group at
ORIX Financial Services, which has 40 years of experience in the
equipment financing industry. "Primagency’s services appeal to us
because they complement our efforts and help us compete even more
effectively."
cial services are on the verge of becoming a commodity, many finan-
cial institutions are looking for ways — outside the institution — to
continue to assist clients who have needs they can’t meet in-house.
This, in turn, has given rise to formal outsourcing agreements.
By establishing a formal agreement with firms like Primagency, finan-
cial institutions can become a single
source for clients to attain all their finan-
cial needs.

“ Our philosophy is ‘there are no short cuts’. We roll up

our sleeves and do the work — comprehensive
Outsourcing not only helps decrease
liability, it enables financial institutions to
establish formal guidelines and agree-
due diligence — before we ever bring borrower requests ments that reflect their standards for
to market. ” doing business. More importantly, it
enables them to maintain the lead in
– Steve Lebetkin, Primagency CEO managing the account.
Moreover, a customer’s continued
reliance on a wide array of products and
“As a borrower, I consider using a finance agency a ‘peace of services pays big dividends in battling commoditization and down-
mind’ issue,” said Joe Capuccio, Chief Financial Officer, Invatech Corp. ward pressure on prices and profits for the financial institution.
“With Primagency’s credit memorandum in hand, lenders are better The bottom line is that working with a finance agency, provides
equipped to provide early answers and meaningful proposals. This a win-win situation for financial institutions and borrowers. There’s
increases my confidence in the deal outcome.” a greater likelihood borrowers will secure the funding they need to
manage and grow their business. Financial institutions have the oppor-
Outsourcing — tunity to deliver better client service and increase the “in-the-box”
A New Path to Building Customer Loyalty hit ratio. m
During the last several years, rapid advances in technology have
strengthened operational efficiencies, but, at the same time, weak- CHERYL KAIDEN is the owner of C A Kaiden Communications, head-
ened the reliable and long-term relationships traditionally established quartered in Branford, CT. She provides communication consulting and writ-
between business customers and their lenders. At a time when finan- ing services to a broad range of clients, including Primagency.

Page 2 of 2 Specialty Lending Supplement — June 2002