Funding is a major and ongoing concern for both small and medium-sized businesses. Maintaining cash flow is essential to keeping your business running. Obtaining sufficient funding is easier said than done, as banks and other traditional lenders are resistant to supporting anything but large corporations.
This can stop businesses in their tracks and force them into turning to lenders with unfair terms, such as dreaded payday lenders. Finding funding that doesn't inadvertently hamper the business is a major problem.
There are options available, though. I encountered one company that has made waves in this niche. Mulligan Funding is a lender that has lent significant amounts of money to growing companies since it was first established. It is part of a new wave of lenders seeking to rectify many of the problems plaguing the business lending niche.
I decided to speak to David Leibowitz, the company's CEO, about what the company does and what his views are on the future of the industry.
1. Thank you for joining me today, could you tell me more about what Mulligan Funding does and what it stands for?
Mulligan Funding provides working capital to small and medium-sized businesses across the Country, to help them in achieving their growth potential. It's a segment of the Main Street economy which appears to have been abandoned by traditional lenders since the financial melt-down of the mid-2000's. These are good, often fast-growing businesses--more often than not owned by the people who manage that business. And access to capital is their lifeblood. Without that, they're prevented from thriving in the way they should--and the very foundation of our economy is crippled as a result.
Our aim at Mulligan Funding is to provide that essential capital to these Main St businesses. To open our doors where traditional lenders have closed theirs; our aim is to provide funding with transparency. Something we feel is sorely lacking in the marketplace.
What Mulligan Funding stands for, is the re-introduction to small and medium-sized business lending, of what have unfortunately become "old-fashioned" concepts such as outstanding customer service and relationship building, and an inflexible attitude towards integrity and openness.
To be honest, our money is expensive--I would have to assume that nearly every alternative lender is going to be an expensive option--we want nothing to be hidden, and we want our borrowers to know that upfront, so they can succeed after the loan. Transparency in costs actually ensures that they can use our money productively for the improvement and growth of their business.
Our core values promote success after lending, not hindrance. Hidden fees and inconspicuous practices are counterintuitive to a successful partnership.
2. What do you think are the biggest difficulties associated with funding businesses in 2016?
From the perspective of the client, the single biggest challenge is getting access to the capital they require. The lending process involved in applying to Banks and other traditional lenders has become far too slow, far too complicated, and far too often ends in a decline. Businesses are simply being starved of the access they need to the capital they need, when they need it. And it's preventing these businesses from achieving the success they deserve--and the success for which our economy so heavily depends upon them.
From the perspective of alternative lenders such as Mulligan Funding, the biggest challenge lies in identifying those businesses that are able to use our funding productively to achieve their desired ambitions. Our money doesn't work for everyone--and our aim is continually to identify those gems out there that simply require fast, simple access to capital in order to get them through a bottleneck or up to the next level of performance.
3. Why are people moving away from traditional lending and what do lenders have to do in order to bring businesses back?
I believe the opposite is in fact true: traditional lenders have moved away from our customer base (small and medium-sized businesses across the country), and not the other way around. They have started taking too long, requiring too much paperwork and security, insisting on virtually no risk, and saying "No" far more often than "Yes". And the result is that these businesses have learned to look elsewhere for the capital they need to achieve their goals--to alternative lenders, whose process is faster, simpler and more transparent--and who understand that lending involves risk, and who say "Yes" much more often than they say "No".
I don't believe it would be easy for traditional lenders to re-capture that market, even if they decided they wanted to. These "new money" lenders have allowed these businesses to experience what it's like to have a funding company that behaves like a partner, with a process that's transparent and efficient. Banks are simply not well-equipped to offer that speed or level of service to these smaller businesses any longer.
4. What are the advantages of businesses that combine both traditional and alternative lending methods, such as crowdfunding?
The advantages to those businesses are that they would likely achieve a lower weighted average cost of capital as a result. Alternative lenders are generally more expensive; but provide funding far quicker and with far fewer strings attached. So by combining those sources of funding (for the very few that are still able to get their banks to say "Yes") these businesses often get the best of both worlds.
5. What do you think are the biggest factors in a business's decision to approach a specific lender?
Access to the needed funding is a given: Without that, there's nothing to discuss and no decision to be made. But at Mulligan Funding, where there are two or more willing lenders, we firmly believe that this decision is motivated primarily by questions of integrity, transparency and service. Those are the factors we think make more of a difference than any others. Price can be traded for collateral; or simplicity; or speed. But nothing can, and nothing should, be traded for integrity, transparency and service.