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Healthier Small Business Borrowers Seen in 2013

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March 22, 2013

We sat down with Marc Glazer, President & CEO, Business Financial Services, and talked about main street, a healthier more optimistic main street.

Mr. Glazer has led the growth of Business Financial Services (BFS) since 2002. Having earlier transformed 4SmallBusiness.com, a small business portal of which he was CEO, into a specialty finance company, he brought on institutional equity partners in 2008 to strengthen the balance sheet and grow the company. Today, BFS is a leading provider of merchant cash advances and specialty loan products in the U.S., and has expanded into the UK and Canada.

Healthier Small Business Borrowers Seen in 2013
With Marc Glazer, President & CEO, Business Financial Services

Bob Coleman: We’re talking with Marc Glazer, President/CEO of Business Financial Services, a Small Business alternative lender out of Florida. Marc, welcome.

Marc Glazer: Thanks Bob, pleasure to be on.

Bob: Tell me about the space that you’re in. What are you seeing in terms of small business lending now – we’re almost in the middle of 2013?

Marc: Over the last few years we’re starting to see small business actually looking to take money mainly for expansion; although they’re cautiously optimistic, we are seeing a positive trend, certainly in the last 18 months and more so in the last 6.

Bob: Are you seeing that your businesses are being healthier, I guess the code word for are your default rates down? Are you seeing better deals in your marketplace?

Marc: Our defaults have dropped slightly, and I think that’s a combination of the macro-economic conditions around the US. But I also think it’s a matter of financing higher quality, larger businesses that from our perspective are just more stable and have been left behind by the obvious banking conditions that are out there.

Bob: Tell us about the type of deals you do. What’s your sweet spot? What industry, what dollar amount, what term?

Marc: Our sweet spot for a deal size is in the $25,000 to $75,000 range, although we go down to 5,000 and we go up to a million. As far as type of businesses – restaurants, retailer, service make up the bulk of it; however with the advent of our small business loan a couple of years ago, we’re now open to manufacturing, distribution and so forth; and doing more on the B to B sector versus just the B to C side.

Bob: Criticism of your industry is the interest rates. What do you guys charge?

Marc: You know, five years ago I would have said the rates were significantly higher and terms were shorter; today we’re going out 12 months, 18 months, and we’re testing even longer than that. And ironically as we’ve gone out further the rates have actually dropped and I think that’s really, the cause of that is basically, again, the quality of the merchants. If our default rates are lower than we can charge less for the money.

Bob: Standard model, credit card type of analysis and daily withdrawals from the charging account?

Marc: Yes, typically we’re getting a daily payment. If they take our merchant cash advance product we’re taking a fixed percentage from their credit card batches. If they’re taking advantage of our loan product it’s typically a daily, although sometimes weekly fixed amount.

Bob: Marc, thank you very much for joining us; appreciate the information.

Marc: Thank you very much, pleasure.

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