Ivan Pereverzev No Comments

Alliance Funding Group Initiates a New Division for Mid-Market Equipment Leasing, Led by Randy Hicks

Alliance Funding Group is proud to announce the appointment of Randy Hicks as its new Senior Vice President of middle market equipment leasing, balance sheet strategy. Mr. Hicks has successfully recruited Todd Greenberg (SVP, CRO) to lead the risk management duties of the new strategy.

Hicks brings over 30 years of experience in the mid-market equipment leasing and finance sector. Before joining Alliance Funding Group, he was an Executive Vice President and co-founder of Nations Equipment Finance, now known as SLR Equipment Finance, and held various leadership roles at GE Capital for 14 years.

With over 14 years in risk management, Greenberg joined Alliance Funding Group from his previous role as Senior Vice President of Risk at Post Road Equipment Finance and had a decade-long career at Nations Equipment Finance in various risk and analyst roles.

“Being active in the middle-market space as a syndicator, we’ve noticed that both banks and private credits have pulled back or moved upstream in their transaction minimums,” Brij Patel, president, CEO and founder of Alliance Funding Group, said. “Leveraging our balance sheet and with continued commitment by our bank partners, we feel that we can fill the void and provide access to competitive capital for our customers and vendor partners.”

“I am very excited to be joining the AFG team, where experience matters. As one of the largest independents in the market, AFG is well positioned to take this next step and I look forward to contributing to the success of this strategy,” Hicks said.

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Alliance Funding Group Secures $39MM in Upsized Corporate Notes

Alliance Funding Group has recently hit a significant milestone. The company has recently managed to upscale its corporate notes to an impressive $39 million. This development underscores AFG’s financial stability and unwavering commitment to fostering growth. It consolidates AFG’s intent to carve out a leadership position within the equipment finance landscape.

The new issuance was assigned a BBB rating by a nationally recognized statistical ratings organization, highlighting AFG’s steadfast financial reliability. AFG plans to allocate the proceeds from this significant transaction towards amplifying working capital and financing the company’s ongoing growth. Alliance Funding Group is actively pursuing potential acquisition opportunities, recognizing them as strategic pathways to further strengthen the industry position.

Since its establishment, AFG has been committed to providing small-ticket and middle-market equipment leasing, financial, and working capital solutions to businesses across the United States. Marking an impressive growth trajectory, Alliance Funding Group has injected over $2 billion into more than 25,000 businesses, with the ambition to expand the influence further, propelling the success of an even larger number of businesses.

AFG expresses appreciation to its core base of institutional investors, whose unwavering support and trust in our growing platform has been instrumental in the company’s success. “With our competitors tightening their credit boxes, we see an exceptional opportunity to gain more market share, both organically and through potential synergistic acquisitions,” said Brij Patel, the founder and President of AFG.

The company’s Senior Vice President of Capital Markets, Brent Hall, emphasized, “After our successful securitization earlier in the year, this recent financing move strengthens our balance sheet even more. We’re witnessing considerable demand from our customers, and this additional capital will empower us to cater to their financial needs in an increasingly volatile economic environment.”

Brean Capital, LLC played a pivotal role in this transaction, serving as AFG’s exclusive financial advisor and sole placement agent. Their expertise and counsel have been invaluable in this significant accomplishment.

AFG is committed to delivering reliable financial solutions to a wide range of businesses, irrespective of the credit type. Headquartered in Tustin, California, AFG expanded its presence with offices in Los Angeles and Carlsbad, CA, Portsmouth, NH, Austin, TX, and Tacoma, WA. Looking ahead, AFG is poised to leverage this additional capital, fortifying its suite of services and contributing to the financial health and growth of businesses across the United States.

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How Inflation Impacts Your Business

Inflation is the subtle yet powerful economic current that can quietly erode the foundations of your business’s financial stability. While it’s most commonly analyzed from the consumer perspective, the inflationary pressure on businesses, particularly those with substantial capital investments, cannot be understated. In this article, we aim to unravel the impact of inflation on your business, providing insights to help you better navigate the ever-changing economic landscape.

What is Inflation?

At its most basic, inflation refers to the increase in the average price of goods and services over time. It results in the devaluation of a currency’s purchasing power, whereby each unit of currency procures less than before. While consumers feel this change, its effects also permeate the business world, greatly influencing the operations and strategies of companies, especially those that depend heavily on substantial physical assets.

The Impact of Inflation on Businesses

Cost of Capital: As inflation increases, so does the cost of capital. Banks and other financial institutions usually raise interest rates to combat inflation, which in turn raises the cost of borrowing for businesses. Consequently, the cost of obtaining new capital to finance equipment or other investments can increase. This makes it harder to finance growth initiatives or new equipment. And if your company has debt with variable interest rates, your repayments could increase drastically.

In anticipation of a rising inflation rate, you might start considering long-term, fixed-rate financing options. As a non-bank lender, AFG operates independently of traditional bank regulations and interest rate norms, offering you flexibility and competitive rates that could prove crucial in inflationary times. We invite you to explore how AFG can guide you through this process.

Equipment Costs: Companies dealing in physical assets, such as manufacturing, construction, or logistics, are significantly affected as inflation increases the cost of equipment. The price of raw materials, the cost of production, and the price of finished goods all rise, leading to an overall increase in the cost of business operations.

Cash Flow: The impact of inflation on cash flow can be significant and comes from many angles. For starters, if the business’s costs are rising due to inflation, this means that more cash is required to pay for the same level of goods and services as before. This includes everything from the electricity bill to the cost of replenishing inventories. If the company has not increased its prices (or cannot, due to competitive pressures), then more cash will be going out of the business, and less will be coming in. This can squeeze cash flow and make it more difficult to meet obligations or pursue growth opportunities.

Pricing Strategy: To keep pace with rising costs, businesses often have to increase their prices. However, doing so can be a delicate balancing act. If prices are raised too much or too quickly, it could drive customers away to competitors. On the other hand, if prices are not raised enough, the business might not cover its costs, squeezing profit margins. It’s essential to have a clear understanding of the market dynamics and the business’s cost structures to create an effective pricing strategy during inflationary times.

The Role of Equipment Financing Amidst Inflation

When inflation is on the rise, the benefits of equipment financing become even more pronounced. Here’s how AFG can help you:

Fixed Interest Rates: Equipment financing often comes with fixed interest rates, meaning the interest you pay won’t increase over the life of the loan. This provides a level of certainty and stability in your financial planning, protecting you from the ups and downs of inflation.

Manageable Costs: Equipment financing allows for the cost of equipment to be spread out over time, rather than requiring a significant upfront investment. This can be particularly beneficial in periods of inflation when preserving cash flow becomes critical.

Latest Technology: Equipment financing gives you the flexibility to access the latest technology. This can be a game-changer, especially in times of inflation, allowing businesses to improve efficiency and productivity, potentially offsetting increased operating costs.

Tax Benefits: The IRS Section 179 Deduction allows you to take the depreciation deduction for up to $1,080,000 of equipment you buy or finance in its first year. In an inflationary environment, this can provide valuable savings and help to partially offset the effect of increased costs.

While inflation can present challenges, understanding its impact and strategically using tools like equipment financing can help mitigate its effects. At AFG, we strive to provide resources and solutions tailored to your unique circumstances, aiding you in navigating the uncertain waters of inflation. Remember, as daunting as economic changes may be, businesses equipped with knowledge and strategic tools are well-positioned to weather any storm. Reach out to us to discuss your equipment financing needs and learn how we can help you in these inflationary times.

Alliance Funding Group No Comments

KBRA Assigns Preliminary Ratings to Alliance Funding Group’s First Equipment ABS

Kroll Bond Rating Agency assigned preliminary ratings to five classes of notes issued by Alliance Funding Group ABS I, (AFG 2023-1), an equipment ABS transaction. AFG 2023-1 represents the first equipment ABS transaction to be sponsored by Alliance Funding Group.

AFG 2023-1 is backed by a pool of equipment loans and leases (equipment contracts). The statistical discounted pool balance (statistical pool) totals $115.2 million and represents the projected cash flows of the equipment contracts discounted at a rate of 8.50%. As of the initial cutoff date, the discounted contract value will be at least $123.4 million and the initial pool characteristics are expected to be substantially similar to the statistical pool. The total collateral may increase by up to $31.3 million (27.20% of the statistical pool) through the addition of equipment contracts during the three-month prefunding period.

The statistical pool includes 1,421 contracts, with an average contract balance of $81,092. Obligor concentrations are low with 1,228 total obligors and the largest obligor representing less than 0.50%. The statistical pool is diversified geographically with the largest state, California, representing approximately 15% and all other states at less than 10% each. The pool is concentrated somewhat in the transportation industry, at approximately 19%. The pool benefits from a weighted average FICO of 747 and weighted average obligor time in business of 17 years.

AFG 2023-1 will issue five classes of notes, including a short-term tranche. Credit enhancement is comprised of overcollateralization, a cash reserve, subordination benefiting senior classes and excess spread. The overcollateralization is subject to a target equal to 15.00% of the current pool balance and a floor equal to 0.50% of the initial pool balance, accounting for any prefunding that occurs. The reserve account is funded at 1.00% of the initial pool balance and is non-amortizing.