May 30, 2000
-- Rick Wilbur shares a recent experience --
Kit:
Given the prevailing funding environment I thought it appropriate and timely to
share a recent experience with you. Please feel free to pass this along.
I
recently had a conversation with the credit manager of a 'funding source', a gentleman
that I've known and respected for many many years. During the course of the conversation
I asked him how their operation was doing since the last transaction we did with
them was an absolute nightmare to complete (documentation and funding). He told
me things were much better and encouraged me to try them again. Due, at least
in part, to my long standing relationship with him I responded by previewing a
transaction I had on my desk for a Lessee that we had done 12 Corp Only leases
for during the past eighteen months. A very good customer. After providing transaction
details he thought the deal would be approved and invited it in. I agreed to submit
it despite this funding sources high rate. In my opinion I was offering them 'a
cherry'.
Early
the next day we received a faxed approval for a $50,000 Corp Only with a limitation
on points. I asked if we exceeded the allowed limitation on points could we split
the difference with the funding source. My old friend didn't know but would check.
Approximately five hours later we received another fax from 'the Broker Manager'.
Paraphrased the fax said:(1) the deal didn't fit their normal corp only requirements
and essentially they made several exceptions for us (this was news to me because
I didn't know what their normal corp only requirements were and didn't ask for
any exception to be made), (2)the paydex was too low to do a Corp Only (our D&B
reported a Paydex of 79), (3) the company had too few employees (D&B reported
40 and a recent article that we provided reported not only had the company just
raised an additional $6.4 million but also stated the company expected to increase
from 70 employees to 100 by the end of July).
The
guy wasn't impressed and bottom line they now wanted a comparable corp only reference
that dated back at least a year and a written explanation of numerous inquiries
on the principals TRW despite the fact that there was no personal guaranty (this
started to feel a lot like homework). When I told him that it was a bit late in
the process to add conditions to their approval he pretty much told me ....'too
%#@^ing bad'. I told him that I'd try to get the information but in light of the
fact that we had not needed that information for any of the 12 other transactions
we completed and that we had already conveyed their approval, I wasn't sure I
could get the information. I asked him if he would honor his approval if I couldn't
get what he wanted and the guy absolutely refused to answer my question. He told
me point blank that he wasn't going to tell me. Almost thirty-five years in this
business and I thought I'd heard it all.
I believe the relationships that we enjoy with most of our funding sources are
based on mutual respect, mutual trust and a sincere concern and appreciation for
the other. Fortunately, the situation I described in this e-mail is an aberration
but I believe it may be an indication of the current mentality of some in the
community. If the funders can't trust and respect the originators and the originators
can't trust and respect the funders we're all in for a very rough ride.
Rick Wilbur
Managing Partner
Media Capital Associates,LLC
www.mediacap.com
(800) 836-7753 ext. 104
