Pasadena Private Finance LLC (PPF), a Pasadena-based non-bank lender, closed a $30 million senior credit facility with East West Bank, the largest publicly traded bank in Southern California, the firm recently announced.
Michael McAdams, CEO of PPF, said that with the East West Bank Enhanced Line of Credit, the PPF will be able to help lower-middle-market businesses or businesses generate $1 million to $5 million of cash flow to obtain capital.
Unlike traditional banks, McAdams said PPF can be more flexible in determining the type of loan a business needs.
“We are not a traditional bank. We can be more flexible and creative in how we look at a company’s credit profile and the type of loan they might need,” McAdams said. “But because we’re looking for collateral from the primary owner, that’s a big comfort to us when we make loans.”
A senior line of credit is guaranteed. There is company collateral that secures the loan in the eyes of the lender. In the event of a company bankruptcy, a senior secured loan would be paid off by selling the collateral assets before other, more junior loans can claim assets, according to www.corporatetrustfund.org.
Senior debt is a first charge development financing loan that would normally constitute the majority of the funds needed to complete a real estate development project. These facilities will be specifically used for real estate development and will be structured in the way that best suits the proposed scheme, in accordance with positivecommercialfinance.co.uk.
McAdams said the PPF offers loans with interest rates of around 7-10%, cheaper than “hard money lenders” but higher than a bank.
According to McAdams, the PPF is considering making loans to “good borrowers” and entrepreneurs with proven success, to the exclusion of start-ups and new business owners.
He said the PPF can also accommodate businesses that have suffered losses due to the COVID-19 pandemic, specifically businesses that struggled to recover for several months to a year during the pandemic.
“If it’s something the company has been losing money on for a number of years, it’s going to be tough for us. We are still a financial institution with fiduciary duties to our investors,” he said. “We look forward to doing business with people who have a proven track record of making things work even in tough times.”
In a statement, Iain Whyte, president of PPF and Pasadena Private Holdings, PPF’s parent, praised the company’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, just as we do with our own borrowers. The fact that the East West Bank is also located in our hometown of Pasadena is a wonderful advantage,” said Whyte.