You’ve likely heard that LSQ has a longstanding partnership program with commercial bankers, but what does this mean, and how can it drive value for your commercial and industrial (C&I) clients during the COVID crisis? In this blog post, we’ll outline how LSQ helps business bankers successfully manage and grow their portfolios— often adding new business and retaining customers they’d otherwise lose.
It’s been reported that U.S. banks will face up to $320 million in credit write-offs this year due to the coronavirus. With the country’s GDP shrinking by 32.9% in the second quarter of 2020, we are in the midst of the sharpest contraction our economy has experienced since World War II. Anecdotal reports and economic indicators all but guarantee commercial bankers will encounter an increased volume of non-performing loans and assets while simultaneously having to decline new business as the availability and quality of credit falls off.
With predicted credit losses having the potential to exceed those of the global financial crisis, maintaining and bringing in new, well-structured accounts within strategically managed portfolios will pave the way to your longevity. Being denied credit, having a credit limit reduced, or worse, having an account go to workout, can often lead to distrust, dissatisfaction, and ultimately, the end of a borrower’s relationship with your bank— but it doesn’t have to be this way.
Your Ally Before, During,
and After the Coronavirus
In this environment, bankers need the ability to implement a stopgap strategy that addresses the declining access to financial capital. For more than 20 years, LSQ has partnered with lending and workout groups to creatively structure deals that benefit banks and businesses, regardless of the economic climate.
Commercial bankers play an essential role for businesses, recommending the best combination of products and services you can offer. It’s no secret that client retention increases when they are engaged with a variety of offerings, including deposit products, merchant services, commercial loans, treasury services, and other corporate-oriented financial solutions.
But what happens when a key component— in this case, working capital, is pulled back or cannot be provided in the first place? Just as you wouldn’t purchase a vehicle without the engine, companies often take their business elsewhere, looking for a comprehensive banking solution that satisfies their funding needs. In these cases, you lose the opportunity to nurture the relationship and make progress with your non-credit offerings. Try to recall the last ten people you turned down or clients that churned due to insufficient funding. It’s likely that we could have helped.
LSQ’s funding guidelines are distinct from those of traditional lenders in that we weigh credit scores, concentration, and operating history (among other factors) differently. Since our founding in 1996, LSQ has partnered with more than 40 U.S. banks, and we understand the complexities involved in the immediate and long-term achievements expected of commercial bankers and loan workout officers. In fact, a substantial portion of our invoice financing business comes from referring bank partners. Needless to say, we are committed to your continued success, as it is tied out ours.
You maintain the relationship.
We manage the credit risk.
Few things are more dispiriting than having to tell a business applicant that their funding request is denied, or calling a client to inform them that their line of credit is being reduced. What if you could soften the blow and continue to provide value by recommending a bank-trusted alternative?
LSQ does not directly compete with you for business. We are here to help you and companies in need of working capital. Therefore, our funding approval process is well-suited for many of the businesses that may not meet your lending standards. In addition to helping companies in need of capital, you’re sending them to a reliable partner who will work with you and your client to increase credit-worthiness, build transaction history, and improve overall financial health.
This allows you to win or retain the relationship and all other products and services for your bank, while together with LSQ, you nurture the account to one day transition all funding into your portfolio. Yes, we lose that client, but it’s what’s best for them, and it helps you achieve your goals, making it likely that you will refer new business to LSQ.
Results are proven.
Referring is painless.
With more than $25 billion funded to U.S. businesses, we are unable to identify any other invoice financing company in our market that has the 20+ years of experience working with and being vetted by American financial institutions at the scale LSQ does. And our 40 plus bank partnerships include an enduring relationship with one of the top five national banks in the country.
This longevity, trust, and experience are testaments to LSQ’s commitment to providing businesses much-needed funding while upholding flexible, yet responsible lending standards. We offer clients bank-level security controls with transparent, cost-effective capital that scales— keeping an open line of communication with bankers in preparation for transition to traditional funding when applicable.
Our products and services may not be an ideal solution for everyone who doesn’t fit your credit box, but working together, banks and LSQ can help more businesses thrive than we can individually. LSQ has identified a niche and designed our business model to help companies in need of capital without directly competing with banks. In fact, we’ve created a banker-friendly program intended to incentivize joint ventures and help more businesses across the country.
To inquire more about how LSQ works with commercial bankers and workout officers to better service C&I portfolios, visit lsq.com/contact-us/.