Pasadena Private Finance LLC (PPF), a non-bank lender headquartered in Pasadena, has closed on a $30 million senior credit facility with East West Bank, the largest publicly traded bank in Southern California, the firm announced recently.
Michael McAdams, PPF’s chief executive officer, said with the enhanced credit facility from East West Bank, the PPF will be able to help lower middle-market firms or businesses generating between $1 million and $5 million of cash flow in getting capital.
Unlike traditional banks, McAdams said PPF can be more flexible in determining the kind of loan a company needs.
“We’re not a traditional bank. We can be more flexible and creative in how we see a company’s credit profile and the kind of loan they might need,” McAdams said. “But because we seek the guarantee of the principal owner, that is a great comfort to us as we make loans.”
A senior credit facility is secured. There is company collateral insuring the loan in the eyes of the lender. In the event of a company collapse, a senior secured loan would be paid off through the sale of the collateral assets before other more junior loans can claim assets, according to www.corporatetrustfund.org.
Senior debt is a first charge development finance loan that would typically make up the majority of the funds required to complete a property development project. Such facilities are to be used specifically for property development and are structured in such a way to best suit the proposed scheme, according to positivecommercialfinance.co.uk.
McAdams said the PPF offers loans with around 7 to 10 % interest rates, cheaper than that of “hard money lenders” but higher than that of a bank.
According to McAdams, the PPF is looking at lending to “good borrowers” and entrepreneurs with proven success, with the exclusion of start-ups and owners of brand new businesses.
He said the PPF may also accommodate businesses that suffered losses because of the COVID-19 pandemic, specifically firms that struggled to recover for a number of months to a year during the pandemic.
“If it’s something where the company has been losing money for several years, that’s going to be hard for us. We still are a financial institution with fiduciary duties to our investors,” he said. “We look forward to doing business with people that have a proven track record of making things work even in tough times.”
In a statement, Iain Whyte, chairman of PPF and Pasadena Private Holdings, PPF’s parent, lauded the firm’s partnership with East West Bank.
“We were fortunate to find in East West Bank a nationally recognized banking partner willing to listen to our unique story and roll up their sleeves, in the same way we do for our own borrowers. The fact that East West Bank is also located in our hometown of Pasadena is a wonderful bonus,” Whyte said.