Liberty SBF Profiled By Wall Street Journal in Exclusive InterviewJune 13, 2016
Please read the below exclusive interview with The Wall Street Journal announcing our recent capital raise and expanded credit facilities. The original article ran in the New Money section here.
Liberty SBF Raises $75M to
Expand Small Business Loans
By Tomio Geron
Liberty SBF has raised $75 million in Series B financing to expand its commercial real estate lending for small businesses.
The funding was led by Exigent Capital and Mainline Investment Partners. The company had previously raised $10 million in equity and $35 million in senior debt financing from Merced Partners, which was formerly known as EBF & Associates; Exigent Capital; Mainline Partners; and Napier Park Global Capital.
Philadelphia-based Liberty SBF is a national lender that focuses on lending for property development, acquisition or refinancing of owner-occupied real estate by small businesses with typical loans of $1 million to $10 million. Liberty has a wholesale loan model and does not originate loans but gets loans from retail partners.
Liberty SBF focuses the majority of its capital on deals using the U.S. Small Business Administration 504 loan program. Under the program, the SBA provides a loan for a portion of the deal and Liberty lends the other portion of the deal.
The firm, which has done $250 million in loans since inception in 2012, has 20 employees. Capital One Bank provides financing to Liberty for its deals.
Retail banks generally lend to “A credit” borrowers, but Liberty focuses on “B credit” deals, where small businesses have quality properties and experienced business operators. However, during the 2008 financial crisis, many such borrowers got moved from A to B ratings after having to raise higher-priced working capital, said Alexander Cohen, chief executive of Liberty SBF.
Congress recently made changes that later this month will allow the 504 program to be used for refinancing, as well as for property acquisition or development. In addition, there are many loans of this type that need to be refinanced. Meanwhile, many large lenders left this sector after the recession, he said. “We really believe this will supercharge volume in the coming years,” Cohen said.
With 504 loans, the SBA has a $5.5 million maximum loan. Liberty will then typically loan up to $10 million into the deal.
Liberty holds all of its loans on its balance sheet, but does plan to securitize them. To have capital to do this, the firm has hired Raymond James to raise about $100 million in additional financing, Cohen said.