Direct lending is a complex asset class, featuring a growing number of unique loan structures, funding structures and transaction types. Now more than ever, direct lenders to the middle market require a flexible service offering – flexibility that, unfortunately, not many providers can accommodate.
Whether limited by their business infrastructure or an inability to scale, service providers often struggle to prioritise customisable middle-market solutions:
A scarcity of options often forces middle-market managers to retain a separate fund administrator and custodian or trustee. This can create numerous issues.
Using multiple vendors – each operating with different accounting systems and timelines – complicates ongoing management and communication. It can hamper the process of producing timely, accurate quarterly or year-end financial statements. And, in situations where the direct lender is also the loan portfolio agent, notices and critical loan information are often communicated in non-standard formats. This inconsistency can delay payments and financial statement preparation during high volume periods.
As more participants enter this increasingly competitive environment, middle-market professionals need to focus on serving their clients, sourcing deal flow and managing their credit exposures. They can’t afford the roadblocks associated with inefficient, inadequate back-office operations or systems that don’t seamlessly interact. An all-in-one solution provides key resources to help overcome these issues.
Advantages of partnering with a full-service provider include:
Use of an independent accounting system
The full-service provider’s loan agency team should use an independent accounting system to:
It’s critical the notices are clear, concise and on time, and that they include all necessary information in the correct format. Additionally, the service provider should be willing to white-label their services. That way, the direct lender can maintain the relationship with the borrower but doesn’t need the staff or technology systems in place to generate notices or process payment and interest payments.
Alignment of goals and priorities
A provider with comprehensive middle-market solutions understands the goals of direct lenders, which can help improve flexibility and efficiency in an ever-changing market. By selecting an all-in-one service provider:
With a reliable full-service partner, you can trust the back-office operations of your business are running smoothly and compliantly – providing you with more time to spend on expanding your business and serving your clients.