CAPX, a Los Angeles based financial services firm, has published a report which notes that middle-market firms (businesses with anywhere between 100 to 2,000 employees, or with $10 million to $500 million in annual revenue) have been experiencing certain challenges when trying to gain access to capital.
The report from CAPX, which offers a Fintech marketplace that is “disrupting existing corporate debt financing markets” with a data-driven platform, states that middle-market companies might benefit from a good plan that can help them survive the COVID-19 crisis. The report cites an update from Reuters which had revealed that middle-market backers were facing many different socioeconomic challenges due to the global Coronavirus outbreak.
CAPX noted in its report:
“Middle market firms are in need of capital, now more than ever. As the U.S. economy confronts a deep and potentially lengthy recession, marked by double-digit unemployment rates and GDP contraction in 2020 forecasted at -4.9%, thousands of firms are struggling to maintain sufficient cash flow to cover operations and payroll, let alone meet their growth and expansion goal.”
The report also mentioned:
“Just when the need is greatest, traditional lending institutions are pulling back. According to the most recent Senior Loan Officer Opinion Survey on Bank Lending Practices, conducted by the Federal Reserve, roughly 7 in 10 banks are imposing more restrictive or conservative underwriting criteria on commercial and industrial (C&I) loans, up from virtually zero in the first quarter of 2020 – a dizzying shift.”
The report further notes that most middle-market CFOs are not in a position to gain access to non-traditional financing sources. It claims that these smaller or mid-sized firms tend to occasionally tap the markets and usually don’t have the time or resources needed to build appropriate relationships with more than simply a few local lenders, who might not be in a position themselves to offer assistance during these unprecedented times.
CAPX recommends adopting a Cloud-powered, intuitive Fintech marketplace as a solution to many of these issues. The company claims that these Cloud-enabled platforms give CFOs “the keys to the kingdom.” CAPX says that during times of tremendous economic stress, the outdated, paper- and “people-focused” status quo has become “wholly inadequate” when it comes to effectively matching middle-market firms in need of funding with appropriate lenders.
CAPX notes in its extensive report that the non-banking sector has grown considerably since the global 2008-2009 financial crisis.
The report reveals:
“Globally, since 2008, total assets under management (AUM) held by non-bank lenders or private credit funds has expanded from $237 billion to nearly $800 billion. The market is projected to reach $1 trillion in AUM by the end of 2020, and now boasts over 850 firms.”
CAPX goes on to mention that, as a Fintech marketplace that aims to convert capital markets data into meaningful analysis, its solutions are designed to help the CFOs of middle-market companies with identifying and accessing appropriate capital structures and lending services. This should help companies accelerate their business growth and development strategies, CAPX claims.