New finance companies emerge for smaller companies

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In the wake of the financial crisis, people often lament the decline of financing opportunities for small- to medium-sized companies. Even with rates at historic lows, the supply of credit just isn't there. But that spells opportunity for some people. TheDeal.com takes a look at three upstarts: MidCap Financial, NXT Capital and Tygris Commercial Finance Group Inc., now EverBank Commercial Finance.

All were spawned from the Chicago area banking scene, specifically by buyout firms. All three are capitalized at about $1 billion and seek opportunities with companies with $5 million to $50 million in earnings. And all are experiencing heavy demand for their services. It pays to have a niche.

Mid-cap, for example, is looking for customers in the healthcare field, which calls for specific expertise. With the financial markets still recovering, small-company financing is not the sort of business to generate outsized returns quickly. This is not a dot.com.

Says one executive of NXT: "We won't see a return to that kind of market activity for many years to come." For finance companies and loan portfolio managers, "access to the capital markets" in the form of securitizations, "along with more aggressive warehouse and term-lending on the part of money center banks, is required for volumes to return." But it's great position to be in.

For more:
- here's the article from TheDeal.com

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