Private Lending Pays Off for Seasonal Business

Securing funds from traditional lending institutions in the post-downturn economy can seem nearly impossible. That’s where private lenders like Actium can bridge the gap and provide resources where other avenues have failed.

Actium worked with a company in a seasonal industry whose long-profitable business had experienced challenges during the Great Recession. As a result, traditional banks would not extend credit. But the business had additional assets that made a private loan not only possible, but also attractive to Actium.

First, the business owned its headquarters and was willing to use the large facility as collateral. Second, the business was also willing to pledge an additional property it owned free and clear.

This situation presented a perfect opportunity for a private lender like Actium. While banks must focus on cash flows from a business in addition to the collateral value, private lenders (also known as hard money lenders) focus more on the value of the underlying collateral.

With two lien-free properties as collateral, Actium provided funding and the business was able to maintain operations at an optimal level. The pledge of this collateral provided a loan-to-value ratio for Actium that was far below those used by banks. This well-collateralized package created the margin of safety required by Actium while benefiting the borrower who received a much-needed loan to fund its operations. This loan continues to serve as a bridge until the borrower secures bank financing in the future.