Jeffrey Sweeney’s Article “Why Is Asset-Based Lending So Expensive?” Published in ABF Journal
Chairman and CEO of US Capital compares cost structures for asset-based loans and commercial bank loans, and explains how specialty finance companies may be able to greatly reduce their cost of capital.
SAN FRANCISCO, NOVEMBER 2017 – ABF Journal, a leading trade journal for the asset-based lending (ABL) community, has published an article by Jeffrey Sweeney, Chairman and CEO at US Capital, in its November/December 2017 issue.
Entitled “Why Is Asset-Based Lending So Expensive? Comparing Cost Structures for ABL and C&I Loans,” Sweeney’s article explains why ABL loans are more expensive than commercial and industrial (C&I) loans. Sweeney also highlights how specialty lenders can secure the greatest reduction in their costs, while tapping new sources of private capital.
“There is a common belief, especially among business borrowers, private equity funds and M&A sponsors, that inefficiencies leading to predatory pricing exist in the small-cap and lower middle market business lending space,” Sweeney explains. “That assumption may be incorrect because the ABL cost structure is very different in comparison to inexpensive bank lending. By utilizing a new, more optimized funding structure, ABL firms may be able to greatly reduce their cost of capital in order to compete with highly levered, low-cost financing provided by C&I loans.”
Sweeney is an investment banker and fund manager with years of experience in direct lending and corporate finance for small to lower middle market businesses. Headquartered in San Francisco, his firm US Capital is a full-service private financial group that specializes in making traditional middle market banking products and services available to the lower middle market.
After setting out strategies to reduce ABL costs, Sweeney concludes, “Specialty finance companies may find it helpful to evaluate new, optimized fund structures to reshape their own balance sheet capital structures. Making use of a private investment fund structure and innovative capital raise solutions allows specialty finance companies to give a greater number of investors access to their asset class, potentially driving down the costs of capital.”
About US Capital
Since 1998, the US Capital team has been committed to providing small and lower middle market businesses and investors with sophisticated debt, equity, and investment opportunities usually available only to larger middle market companies and institutional investors. The firm manages direct investment funds and provides wealth management and capital raise services. Operating with its registered investment bank affiliate, US Capital Global Securities, LLC, the firm acts as a licensed placement agent for companies, funds, and projects, and collaborates closely with its peers in professional banking and investment advisory.