Lower Middle Market | Credit Markets
Credit markets for the lower middle market are now facing increasing challenges that are likely to last for the next few years. Inflation and supply chain issues are projected to be an ongoing drag on profits as management looks at their current financing to make sure it can meet the changing market. Recent and projected increases in short term rates will continue to impact leveraged middle market companies as higher interest costs will undoubtedly be reflected by a negative impact on earnings.
Compounding the problem the government’s support of companies throughout the pandemic through the issuance of loans and loan guarantees such as PPP, EIDL, Main Street and ERC programs are ending and companies will need to rely on traditional methods of financing. Combine this with the increase in short term rates signaling a tightening of credit to businesses of all sizes. Particularly to those small and lower middle market companies that are leveraged and directly feeling the impact of the higher rate environment.
Over the past three years, Growth Capital Advisors has been seeing a significant increase of new players in the alternative lending space, as evidenced by our carefully curated and proprietary database which has expanded seven fold during this time frame. Although more costly than banks, these sources of capital typically lend more to the same company, and offer greater flexibility both with terms and financial covenants.
The role of GCA is to help our client companies locate these more aggressive lenders and analyze the offers, negotiate on their behalf, and help choose the best option to meet our client’s needs.
Growth Capital Advisors was started in 2017 just for times like these. Our experienced team of former lenders and CFOs dig into each situation and help develop solutions to almost any situation imaginable.
Contact Us and we will provide you a free no obligation assessment of your business and the role we can play to help bring about a favorable outcome to any financing challenge your business may be facing.