As alternative lenders scale, most will move from corporate
facilities and overdrafts on bank standard forms to consider a
"specialty finance" facility.
These facilities offer non-bank lenders their first taste of
asset-backed lending and are a valuable tool in the early stages of
a specialty lending business.
However, as specialty lending business grow even further, the
logical next step is often to "jump" to a securitised
warehouse structure (while noting that, for some originators,
increasing existing borrowing (by utilising accordion features,
bringing in additional senior lenders or new mezzanine lenders) may
be more appropriate).
These securitised warehouse facilities are more scalable
products offering favourable pricing and providing access to a new
market of lenders looking to gain exposure to the originator's
products.
