What to Look For in a Middle-Market Lender

business managers having a strategic meeting, what to look for in a middle market lender

Estimated reading time: 4 minutes

Large, long-established corporations usually obtain bank loans to pursue their growth initiatives, and small businesses rely on startup loans, personal savings, angel investors, and short-term loans for their operations. This begs the question: Where do middle-market companies, also referred to as mid-market companies, get funding? Moreover, what should middle-market CEOs, CFOs, and controllers look for in a middle-market business lender?

In this Balboa Capital blog article, we answer these questions and provide insight into middle-market business lending. This article is an excellent resource if you want to secure loans or financing for your middle-market company.

Middle-market lending, defined.

Regarding company size and annual revenue, middle-market companies are between large corporations and small businesses. Middle-market companies have staff ranging from 100 to several thousand employees and annual revenues ranging from $10 million to $1 billion.1 Middle-market lending refers to providing capital to mid-sized companies for various purposes, such as expansion, equipment, inventory, acquisitions, project financing, research and development (R&D), and operational costs.

This market includes traditional banks, private equity firms, and institutional investors. There are also business lenders that specialize in middle-market financing. Balboa Capital, for example, is a bank-owned business lender that structures equipment financing solutions and unsecured business loans for middle-market companies nationwide.

Middle-market lending expertise.

Navigating the complex world of middle-market financing can be overwhelming. However, if you are looking for a reliable partner, the capabilities and expertise of a middle-market lender can make a significant difference. In short, a lender with a thorough understanding of middle-market lending and experience in your industry can offer unique insights and develop a financing solution that meets your company’s specific needs.

An experienced middle-market business lender can also help you navigate the complicated financing landscape.

Flexible financing solutions.

There’s no one-size-fits-all solution when it comes to financing for middle-market enterprises. Your company is unique, and so are its financial needs. That’s why it’s essential to work with a lender that can take the time to understand your business and offer customized financing solutions designed to help you achieve your strategic and growth goals.

Suppose you require different financing solutions, such as funding to finance equipment and a working capital loan. In that case, choosing a lender that provides multiple products under a single roof is beneficial. This can save you time and effort as you won’t have to search for another lender. Your lender will already be familiar with you and your business, resulting in a more streamlined and personalized process.

Favorable rates and flexible repayment terms.

When it comes to obtaining financing solutions for your middle-market company, it’s important to prioritize your search for a lender that can provide competitive interest rates and flexible repayment terms. You’ll want to ensure that the lender’s rates align with industry standards and that their repayment terms are structured to work with your company’s budget and cash flow

This way, you can avoid overpaying on interest rates and fees, and instead, focus on growing your business without worrying about financial constraints. Lastly, a good deal on a loan or financing solution allows you to save money that can be put toward other business needs.

A solid reputation.

When a lender is known for its integrity, quality, and customer-centric approach, it gains the trust and loyalty of companies and stands out from the competition. A lender with a solid reputation also instills confidence in the middle-market companies it works with. 

When evaluating middle-market business lenders, consider their track record of customer satisfaction, transparency in their lending practices, and any relevant reviews or testimonials from previous borrowers. By doing so, you can make a more informed decision about the lender you choose to work with and potentially avoid any issues or complications in the future.

Significant lending capacity and prompt turnaround times.

A lender with significant lending capacity can be a game-changer for your middle-market company. It can provide your business with the necessary financial resources to undertake ambitious projects and large-scale investment initiatives that might have been previously out of reach, ultimately leading to enhanced growth and success.

Finally, when time is of the essence, and your middle-market company needs to move swiftly to capitalize on a fleeting opportunity, a lender offering prompt turnaround times is a huge benefit. It enables you to make swift decisions and stay ahead of the curve without worrying about delays in financing. 

Sources:

1 – https://www.middlemarketcenter.org/Media/Documents/MiddleMarketIndicators/2023-Q4/FullReport/NCMM_MMI_YEAR-END_2023_012524.pdf

Balboa Capital, a Division of Ameris Bank, is not affiliated with nor endorses The National Center for the Middle Market. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.