How banks can work
We provide all underwriting
All underwriting is completed in-house following the receipt of an independent, 3rd party field examination. This independent review combined with CFF’s relationship and experience from working with with the business allows for CFF to thoroughly review the business and mitigate risk. Because CFF’s underwriting is highly specific, it is completed in-house to ensure that all facets of the business are critically examined.
All underwriting is completed by experienced credit analysts and is formally reviewed by CFF’s Chief Credit Officer prior to being submitted to the CFF Credit Committee. Traditionally, CFF’s detailed and thorough underwriting reports have been satisfactory for banking partners. A sample field exam and underwriting are available upon request.
All deals are full recourse
All deals are full recourse, meaning that despite what happens, the borrower will repay the debts to the lender. With the credit enhancement provided by CFF to the banking partner and the assets of the CFF client, banking partners are able to feel secure knowing that all debts will be repaid to the lender.
CFF will typically assume a first position lien on the assets of the client, ensuring that in the case of financial downturn, CFF will be able to make payments to banking partner lenders as promised.
Banking partners who are interested in working with CFF may do so in a variety of ways. Traditionally, banking partners receive due diligence materials, the field exam, the underwriting, and other requested documents needed on a case-by-case basis.
From here, banking partners issue a loan to CFF and CFF provides a credit enhancement at their institution. This process works as a traditional loan as set forth in the terms and agreements. CFF from there extends a line of credit to its customer.
Credit enhancements by us to reduce risk to banks
In order to reduce risk, CFF will provide a credit enhancement to the banking partner during the course of the loan through cash on deposit, securities, or other agreed upon assets.
This allows for the banking partner to have a reduced level of exposure.
Deal sizes are typically broad and dependent on the needs of the CFF client. Typical deal criteria is an investment size of $500,000 to $15mm.
Typical clients have revenues that range between $10mm to $100mm.
How mezzanine investors can work with CFF
Above market returns: Because mezzanine investments are a hybrid between equity and debt investments, returns are generally above market rates.
Collateralized return: Returns are guaranteed by CFF as CFF typically assumes a first position lien on the assets. In AR Financing, borrowers are borrowing against their assets and pledging those assets as collateral. This allows for a collateralized return for investors.
Continued deal flow: An investor is guaranteed a diverse portfolio with a mezzanine investment. CFF has a diversified portfolio including transportation, oil and gas, and energy companies. A mezzanine investment in CFF allows for funds to be spread across a diverse selection of highly vetted businesses utilizing AR Financing.
Low risk: Like our banking partners, a mezzanine investment is relatively low risk. All deals are full recourse, meaning that the borrower will repay the debts to the lender. Traditionally CFF will assume a first position lien on the assets of the client, ensuring that in the case of financial downturn, CFF will be able to make payments to mezzanine investors as promised.