Promontory Local Credit Gives Community Banks a New Small Business Lending Solution
Fund Established to Supplement Conventional Bank Lending
Arlington, VA (April 21, 2017) – Promontory Local CreditSM, a second lien lending solution introduced today, enhances the ability of community banks to satisfy the borrowing needs of their small and middle-market business customers.
“We have backing for Promontory Local Credit loans from institutional investors for up to $380 million in funding with ample capital to deploy today,” said Jason Tepperman, Managing Director of PLC Fund Advisors, LLC, the manager of Promontory Local Credit.
Promontory Local Credit loans address a problem that community banks often face. Many borrowers have strong earnings and cash flows but lack the collateral or other credit support that a bank requires to fully underwrite a loan request. Second lien loans can bridge the gap between a borrower’s capital need and the amount that a bank can lend, enabling banks to deliver a complete financing package to their customers.
Promontory Local Credit second lien loans range from $500,000 to $3 million in size—over and above a conventional loan made by the borrower’s local bank—potentially increasing the total credit available to a customer by 25% to 50%.
“Larger companies have historically had ready access to second lien loans, but, until now, this proven solution has remained generally unavailable to the smaller businesses that are the focus of most community banks,” said Tepperman. “This additional capital can be decisive in enabling a borrower to pursue an important business objective, such as acquiring a company, expanding a facility, or buying out a partner.”
Promontory Local Credit loans carry terms and maturities that match a bank’s own loans, and a borrower enjoys the convenience of a seamless experience as the bank continues to lead the relationship. Unlike other forms of junior capital, Promontory Local Credit loans do not require equity in the borrower or active control over management.
Promontory Local Credit was established in collaboration with founders of Promontory Interfinancial Network, a trusted partner that has been chosen by 3,000 financial institutions nationwide, including more than 40 percent of the banks currently in the United States.
“Simply put, we’ve helped build Promontory Local Credit to support Main Street banks as they lend to local businesses,” said Mark Jacobsen, President and Chief Executive Officer of Promontory Interfinancial Network. “It is another way we can help the thousands of banks thatare Promontory Network members better serve their customers and their communities.”
About PLC Fund Advisors, LLC
PLC Fund Advisors, LLC was established in collaboration with founders of Promontory Interfinancial Network, LLC to manage the Promontory Local Credit lending solution, bringing together specialized expertise in community banking, commercial lending, and credit management. Principals of the firm include Jason Tepperman (former director of the U.S. Treasury’s Small Business Lending Fund), Arcinée Hermiston (former Chief Credit Officer of Bank of the West), and Alan Colner (former director of Yadkin Financial Corp., a North Carolina bank with $7.4 billion of assets, and a cofounder of its predecessor institution).
Senior Vice President, External Affairs
Promontory Interfinancial Network, LLC