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Income verification is often overlooked by many lenders, but it shouldn't be I recently chatted with a customer about streamlining income verification, and it's clear that many are missing out on a powerful tool: income scores This isn't just about making the verification process smoother - it's about transforming how lenders make decisions We've seen a big shift in lending practices, driven by two main factors: efficiency and risk management Income scores: While they don't replace full income verification, these scores from credit bureaus give a quick estimate of an applicant's income without needing tons of paperwork upfront The challenge is that lenders need accurate income data to make smart decisions, and traditional methods can be slow and complicated As more lenders look to simplify their processes, we'll likely see growing interest in tools like income scores Key benefits: 1. Spot differences: Compare self-reported income against the score 2. Customize offers: Shape initial credit offers before full verification 3. Guide documentation: Ask for more proof when there are big differences 4. Keep tabs: Track income changes over time in portfolio management What's really cool about this tool: it uses algorithms that look at credit usage patterns and reported incomes from various sources That's a ton of data being crunched! Using income scores can help lenders make smarter decisions earlier in the process, leading to more efficient lending practices This shift towards smarter, data-driven lending is huge, and I think it's here to stay Don't overlook the impact income scores can have on improving your lending process. Our team at CRS‎‎ can help if you have any further questions on this.

In 2023, the asset-based lending market saw growth in working capital commitments despite economic fluctuations. While banks experienced soft demand for new business, non-bank lenders are reporting increased demand. The ABL industry appears well-positioned to provide vital working capital support to businesses moving forward. As North America's largest non-bank non-captive financial institution, we have the expertise to help companies optimize their assets, paving the way for new opportunities. To learn more about the possibilities of asset-based lending, check out the ABF Journal's recent article : https://ow.ly/PQFI30sBOiT

With Net Asset Value (NAV) lending doubling from 2020 to approximately $44B in 2023, this strategy is becoming more widespread among non-bank lenders. Latest studies suggest as much as $145B of capital could be committed to the category by 2030. Non-bank lenders are driving the rising adoption: NAV returns are better than direct lending and the volatility is relatively low compared to PE returns. NAV lending is certainly subject to default risk. That risk can be mitigated by strong underwriting and loan covenants, such as LTV constraints, liquidity ratio tests and portfolio company diversification requirements. SS&C’s expansive private credit expertise and our advanced technology can support the entire loan and fund lifecycle for private credit funds. To learn more about how SS&C can play a supportive role in NAV lending, check out our blog.

Larger deals led to asset-based lending growth in 2023 Asset-based lending commitments grew 3.4% during 2023, which was larger than the 3.1% growth recorded by banks but sharply lower than the 12.7% growth recorded by non-banks, as per a survey report released recently. However, new client commitments declined by 5.6% for banks but grew sharply by 38% for non-banks while commitment runoffs were down 19.2% and rose by a whopping 65.7% respectively, according to the data released by Secured Finance Network. The report noted that while client deals were fewer in 2023 compared to a year ago, the deals were larger. Total outstandings fell by 7.8% for all lenders during 2023 with the rate for banks declining by 8.3% while non-banks saw a 6% increase. Utilization rates declined for both lender groups. The report also noted that revenues grew faster than expenses and the average return on assets declined for banks but rose for non-banks. Portfolio performance remained a soft spot in 2023 with a rise in non-accruals and gross write-offs for all lenders. 

A snapshot of June achievements by brokers and how we have helped! Multiple standard size private lending deals from $800k to $1mil Multiple mid size deals from $1.2mil to approx. $2.8mil Larger size deals funded at about $9mil A trophy asset funded at just over $40mil Alt doc and near prime home loans (N1 Plus), multiple deals ranging from $600k to $1.9mil. What to expect in a broker's journey to fund a deal? Stage 1: Initial meeting and fact find Stage 2: Indicative Terms Sheet issued, valuations quote or reassign Stage 3: Due diligence, terms negotiation, borrowers' situations' clarifications, evidence docs, etc. Stage 4: Loan documentation & clauses, Conditions Precedent fulfillment, independent legal advice and/or financial advice, settlement preparation Stage 5: Funded and post-settlement conditions, regular follow ups on exit strategy Private capital is hungry for deals backed by quality asset, making brokers play a crucial role to provide the deal flow. 99% of our deal flows from brokers and referrals. Private lending is rarely straightforward and financiers of any size need to tap the expertise of brokers to make everyone's work more efficient and productive. We have the appetite to do more with our broker partners! Please reach out in the new FY25! N1 offers real flexibility in private lending. Reach out to our friendly team and speaks directly to decision makers. We control and lend our own fund and we don't have restrictive policy. N1H currently manages about $155mil and funding sits in our account ready for immediate deployment. N1H, as a direct lender, aims to uphold elevated standards in private lending through ethical practices, diligent governance, and a commitment to strong compliance. Have a scenario? Contact me on [email protected]

The Times They Are A Changin’ The three pillars of Private Credit have evolved from 1) Middle Market Lending, 2) Lower Middle Market Lending and 3) Upper Middle Market Lending to a broader, larger TAM that is worthy of consideration. Capital allocators have greater flexibility with a strong potential for enhanced returns by optimizing and diversifying their portfolio of Private Credit holdings. Key to select upper-quartile, experienced managers, however the approach to strategy that has prevailed during the past 10 years, may not be optimal in the years to come. Looking forward, Private Credit will be defined differently. Direct Lending will continue to receive allocations, however Asset-Based Lending will begin to take a larger share of the growing pie. ABL is huge, the TAM is measured in tens-of-trillions and I believe will grow to be as large as Direct Lending in 10-years’ time. Marathon Asset Management has been actively running its ABL strategy for the over 15 years and as an incumbent and experienced ABL manager we see firsthand how this market is developing. Basel III-Endgame will advance the development of Private Credit ABL just as Basel III enabled private credit managers to capture market share for Direct Lending over the past 15 years since the GFC. As the global economy grows, both Direct Lending and ABL will benefit as they form the 2 key pillars of the Private Credit market. The 3rd leg of the Private Credit stool are Opportunistic Strategies, defined as Capital Solutions, Dislocation & Distressed. Capital Solutions are a critical component to lending allowing for both growth capital as well as bridge capital during times of stress or transition for a company. Capital solutions may require a turn of extra leverage, carrying significantly higher coupons (~200bp+), +warrants supported by super-strong covenant package that can provide the lender with higher IRRs and MOICs.. Given current market conditions, capital solutions are a key component for any opportunistic lending program. As companies go all out to avoid BK, distressed exchanges have added to the opportunity set, as new money solutions enable companies to exploit weak documentation within credit agreements lenders previously accepted. Today, Opportunistic Credit is robust and I see as many opportunities in Capital Solutions as I do in special situations and dislocation. The right combo for a Private Credit portfolio might be 40% Direct Lending, 40% Asset-Based Lending & 20% Opportunistic Credit. Private Credit performance is remarkably consistent with lower volatility relative to most alternative assets. Porfolio Construction is always top of mind for me - how would you build your Private Credit portfolio? What strategies, which managers, how big of an allocation across a balance book that includes Public Debt, Public Equities and Alternatives? Private Credit in aggregate is approaching $5T across various strategies. I believe it will 3x ($15T) in 10-years.

A snapshot of June achievements by brokers and how we have helped! Multiple standard size private lending deals from $800k to $1mil Multiple mid size deals from $1.2mil to approx. $2.8mil Larger size deals funded at about $9mil A trophy asset funded at just over $40mil Alt doc and near prime home loans (N1 Plus), multiple deals ranging from $600k to $1.9mil. What to expect in a broker's journey to fund a deal? Stage 1: Initial meeting and fact find Stage 2: Indicative Terms Sheet issued, valuations quote or reassign Stage 3: Due diligence, terms negotiation, borrowers' situations' clarifications, evidence docs, etc. Stage 4: Loan documentation & clauses, Conditions Precedent fulfillment, independent legal advice and/or financial advice, settlement preparation Stage 5: Funded and post-settlement conditions, regular follow ups on exit strategy Private capital is hungry for deals backed by quality asset, making brokers play a crucial role to provide the deal flow. 99% of our deal flows from brokers and referrals. Private lending is rarely straightforward and financiers of any size need to tap the expertise of brokers to make everyone's work more efficient and productive. We have the appetite to do more with our broker partners! Please reach out in the new FY25! N1 offers real flexibility in private lending. Reach out to our friendly team and speaks directly to decision makers. We control and lend our own fund and we don't have restrictive policy. N1H currently manages about $155mil and funding sits in our account ready for immediate deployment. N1H, as a direct lender, aims to uphold elevated standards in private lending through ethical practices, diligent governance, and a commitment to strong compliance. Have a scenario? [email protected]

Direct Lending Outlook: High Return Potential, More Deal Activity Despite potential challenges, such as slightly lower asset yields and a moderate decline in deal activity last year, disciplined managers at AllianceBernstein are expecting to see high returns. Here are key takeaways: 1️⃣ Optimistic Outlook: Despite lower volume, direct lending returns peaked in 2023, thanks to higher rates. Resilient fundamental performance among middle market borrowers suggests another strong year ahead. 2️⃣ Moderate Decline in Yields: While the Fed may cut rates gradually, yields are expected to stay attractive for lenders, promising above-average return potential. 3️⃣ Emphasis on Asset Selection: Resilient portfolios with strong upfront underwriting and active management will be crucial. Despite potential challenges for some borrowers, a soft economic landing is anticipated. 4️⃣ More Deal Activity: Stable rates are likely to increase deal activity, with financial sponsors eager to deploy capital and banks continuing their retreat from middle market lending. 5️⃣ Bigger Opportunity Set: Banks' retreat from leveraged lending is set to continue, opening up more opportunities for direct lenders. Partnerships between banks and private lenders offer additional avenues for growth. In summary, while yields may moderate, strong returns are expected for investors in direct lending, especially those who prioritize disciplined portfolio management. Read the full article here: https://lnkd.in/eHfa2ZSN #DirectLending #InvestmentOutlook 

In 2023, the asset-based lending market saw growth in working capital commitments despite economic fluctuations. According to data released by the Secured Finance Network's Asset-Based Lending Survey, there were fewer new client deals compared to the previous year, but they were larger in size. While banks experienced soft demand for new business, non-bank lenders are reporting increased demand. The ABL industry appears well-positioned to provide vital working capital support to businesses moving forward. Find more highlights and a link to the complete survey: https://ow.ly/AaFE50Rm59w? #CommercialFinance #ABL #AssetBasedLending ABF Journal

Exciting Developments in the Bad Credit Loans Service Market As the financial landscape continues to evolve, it's essential to recognize the dynamic shifts within the bad credit loans service market. Here's a deep dive into the key drivers, challenges, and opportunities shaping this sector: Key Drivers: 1️⃣ Increasing Demand: Factors like financial inclusion, economic downturns, and unexpected expenses are driving a surge in demand for credit among individuals with bad credit. 2️⃣ Growing Availability: Fintech innovations and alternative lending models are expanding access to bad credit loans from a variety of lenders. 3️⃣ Technology Integration: The use of technology, online applications, data analytics, and mobile banking is making it easier for borrowers to apply for and obtain bad credit loans. Challenges: 1️⃣ Risk of Defaults: Lenders face the challenge of mitigating defaults due to the higher likelihood among borrowers with bad credit. 2️⃣ High Cost of Borrowing: Bad credit loans often come with higher interest rates, posing a burden on financially struggling borrowers. 3️⃣ Regulatory Environment: Evolving regulations aimed at consumer protection require lenders to adapt and ensure compliance. 4️⃣ Data Security: With increased digitization, protecting borrower information from data breaches is a top priority. 5️⃣ Competition: Intensified competition can lead to predatory practices and market saturation. Opportunities: 1️⃣ Expanding Access: Innovations in credit scoring models and partnerships with fintech companies can reach new borrower segments. 2️⃣ Personalized Lending: Utilizing data analytics for personalized offers and risk management can improve borrower outcomes. 3️⃣ Technological Innovation: Leveraging AI, automation, and open banking platforms can streamline processes and enhance accessibility. 4️⃣ Diversifying Loan Products: Offering a range of loan products beyond personal loans and partnering with merchants for point-of-sale financing. 5️⃣ Trust and Transparency: Building trust through transparent loan terms, educational resources, and engagement with regulatory bodies. The bad credit loans service market presents both challenges and opportunities for lenders to innovate, adapt, and serve borrowers effectively. Embracing technology, fostering financial literacy, and prioritizing responsible lending practices are key to driving sustainable growth and fostering financial inclusion. For Sample Report: https://lnkd.in/d8hXHq8N #BadCreditLoans #FinancialInclusion #Fintech #Innovation #Lending #Technology #Regulation #Opportunity #Finance