In the spirit of the transparency we so highly value, we will be giving a bi-weekly update on the state of the funding industry and what we see occurring with lenders. I think the most important thing to keep in mind is that this will pass and to keep a cool head while looking for opportunities to help your business. These are the times where you as a business are encouraged to see the forest for the trees.
We want to be very clear in what’s happening across the breadth of lending.
Lenders are seeing a massive uptick in business submissions for short term business funding. This is not a surprise seeing that revenue for most companies is down by up to 70%. But with this volume we are seeing a relative amount of panic. During times when money is at a premium and revenues are low, the cost of funds will correspondingly rise dramatically. It is simple supply and demand. Even with these challenges however, we are still seeing a 90%+ approval ratio on submissions.
Under these circumstances, lenders have understandably tightened their guidelines, it would behoove me as the agent to recommend you to take your first offer. We have seen businesses holding out for "better" offers. This is turned out negatively EVERY SINGLE TIME.
In closing, if you are fortunate enough to get a decent loan offer, we would advise you take it. Don't let unreasonable expectations on rate or term harm your goals. If you need cash, you need it now.
Over the past week we have not only seen lenders become more reserved, but even more restrictive on their underwriting guidelines. EVERYONE is nervous right now and it will only get better as time moves on.
We have also witnessed some lenders completely restrict or completely cease all funding for the foreseeable future. These are three of the largest lenders in the industry so take any opportunity you can. This trend will be very prevalent in the coming weeks.
These restrictions are to continue until the end of the month at minimum. As to the restricted industries. CEO's of some of the top lenders have assured us that the pauses and restrictions are in place to address potential cash flow problems that may occur as a result of merchants pausing or defaulting on loans.
Looking Forward :
These are the times where WE as Lenders must remain calm in the face of this tragedy for the sake of you, our merchants. Panic, trepidation, and misinformation can spread just as quickly as this virus has. Instead of being swept up in the moment we will look for ways to help merchants by taking this information into account.
We are still funding merchants. The strength of our platform is options and being able to pivot in times where options are scarce.
Use a CPS Account Manager as a resource to find a solution.
Switch to a cash discount merchant account ASAP. Taking this action will help preserve capital in the coming months as business attempts to recover from this downturn. Ask us about cash discount or surcharging and how to switch to this money saving program.
We know you are all nervous, but there is a light at the end of this tunnel. We will be here 24x7 for all of your funding needs. Be assured that we are flush with capital and lenders to meet your needs. Please be safe out there and try to conduct business by telephone during this time. As always, if you need anything at all please do not hesitate to call.
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