SALT LAKE CITY, September 1, 2021 / PRNewswire / – Celtic Bank, a Utahindustrial bank, is expanding its commercial loan offerings to technology companies that are not well suited to traditional lending products given the nature of their business models.
“This is an attractive loan product that may not be suitable for many traditional banking organizations,” said Reese Howell, Jr., CEO of Celtic Bank. “It requires a different analysis and a different way of assessing risk. These features make it attractive to Celtic Bank. We’ve always been committed to finding niche products and segments of the banking industry where we can make a significant impact, and we’re doing it in a safe and sound way. “
Celtic’s Recurring Income Loans are designed for growing-stage software and technology companies that provide ‘mission-critical’ technology platforms to their customers and have recurring revenue models (contract or subscription) . Because their primary assets are usually intangible, owners and founders find it difficult to obtain commercial financing through conventional means. Instead, they usually raise capital by trading shares in their business.
“Because our loan program is a pure debt instrument, recurring income financing is an option for companies to raise growth capital without further dilution of equity,” said Daniel Godefroy, SVP of Asset Based Lending and Business Development Officer for recurring revenue financing at Celtic Bank
Currently, most recurring income financing is available from non-bank lenders. These loans tend to have short amortization periods with large loan repayments that can eat away at the cash homeowners need to thrive. Banking participants in the industry generally need warrants or other equity “nudges” to improve program returns.
“Because our recurring income program is particularly suited to growing technology companies with a two to four year horizon in the event of a liquidity event, the repayment structure is designed to preserve liquidity for continued growth. Our loans are structured in interest only, that is, split between a cash payment and a paid-in-kind (PIK) component that is deferred until maturity. Ideally, this is one of the last installments of capital to be raised to bring them into a liquidity event. “
Celtic Bank opened in March 2001, and over the past 20 years has grown into one of the nation’s leading SBA lenders. In addition to SBA loans, the bank has diversified into strategic lending partnerships with FinTech companies and created a specialist trade finance group that specializes in providing non-SBA loans for equipment financing, the financing of renewable energies and now – the financing of recurring revenues.
“I think this is a great opportunity for us to leverage our core competencies and expertise as a lending institution to target a different market segment that is also not competing with our others. products, ”said Howell, Jr.
For more information on Recurring Revenue Funding at Celtic Bank, contact Daniel Godefroy at [email protected] or 801-320-6564.
SOURCE Celtic Bank Corporation