What do equipment leasing companies have in common with asset-based lending (ABL), receivables finance and factoring companies? More today than some realize, according to Bob Trojan, former CEO of the Commercial Finance Association (CFA) who is headed to the trade group’s annual meeting in November with senior management leaders from The Alta Group.
“Everyone needs to grow,” he says, and “new ways of thinking about financing delivery methods and faster origination processes will reduce silos and lead to new alliances and possible merger and acquisition activity.” He suggests the divide was historically based on silos within organizations. But now, technology (and customer expectations for solutions, not products) are diminishing barriers, and equipment lessors are realizing this is the time to explore new markets. ABLs are doing the same.
Beyond reliance on equipment as collateral, financing providers of all types look at the same credit metrics – credit scores, capacity to repay, cash flow, business valuations and many kinds of aggregated data for analysis—even in real time. This makes entry into new areas easier to evaluate and more viable for execution.
Trojan observes there is more fluidity stimulated by new entrants or “disrupters” in financial services today — the “Fintechs” —from outside traditional leasing and ABL financing segments. Companies providing financing and related services today want to offer everything from leases and loans to working capital and bundled solutions, and they are seeking new ways to expand and compete in a rapidly changing financial services marketplace.
“The bottom line” says Trojan, “is that businesses need capital to expand that they can’t always obtain from banks still burdened by stringent regulatory conditions imposed following the financial meltdown 10 years ago.”
In small-to-mid-size business markets, customers approach financing sources with increasing expectations for new levels of speed, flexibility and service. Trojan says, “They don’t care if the provider is an equipment finance company, an ABL or the man on the moon. To them, any industry-imposed divisions are irrelevant.”
There are already a number of financial institutions bridging the various worlds of finance and more are expected to follow. This is triggering meetings that Trojan and Alta’s John Deane, Tom Wajnert and Jonathan Fales are planning with executives at the Nov. 8-10 CFA event.
During his five years as CEO of the CFA, Trojan launched the trade association’s first conference on Fintech that brought together traditional industry players with new technology startups. Recently he has been an advisor to Fintech accelerators; and, earlier in his career, Trojan led the formation of CIT Bank while in a senior leadership position at The CIT Group. His extensive background, combined with the equipment leasing veterans Deane, Wajnert and Fales will enable what is sure to be some productive and forward-thinking discussions.
For more information or to schedule an appointment at the CFA, please contact:
Bob Trojan <firstname.lastname@example.org.