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Middle Market Loans – Debt & Working Capital Solutions

Middle Market Lending

Imagine a job that thrives on promoting creativity, innovation, open-mindedness, and growth for employees, that has a strong corporate structure with little bureaucracy in decision making, all while continuously creating opportunities for employee advancement? But it doesn’t end there! Add in the idea of enjoying the benefits of a larger sized company without the uninterested “higher up’s” avoiding the employees and the agility to avoid the hassles associated with big businesses. Oh, and don’t forget the up close and personal relationship formed with loyal customers. Sounds like this could never truly happen, right? Well, this is when the explanation of the most often forgotten about business sector begins – middle market businesses.

Middle market businesses, often referred to as “mid-sized” or “mid-market” businesses, usually refer to a business in the range of $5 million to $500 million in revenue, however some analysts gauge mid-market businesses at the $100 million to $1 billion mark. Really, any business that does not fit the Small Business Administration’s size criteria, but does not reach the amount to be considered a big business (over $1 billion in revenue). The middle market is typically broken down into three tiers:

  1. Lower Middle Market: $5 – $50 million of revenue
  2. Middle Market: $50 – $500 million of revenue
  3. Upper Middle Market: $500 million – $1 billion of revenue.

The middle market plays a significant role in the United States economy, representing about one third of private sector Gross Domestic Product and employing over 25 percent of the total labor workforce. The current rate of employment growth in the middle market business sector is at an all time high of 4.9 percent, with a rate of revenue growth at 6.3 percent – these numbers are only expected to increase in the next year.

The middle market business sector is expected to see continuous growth, more so than any other type of business; the proof of the long standing successes of the mid-sized business sector is during the dark years of 2007 to 2010, otherwise known as the Great Recession. During this period, 82 percent of medium sized firms stayed afloat (only 57 percent of small businesses were able to do that). There was a high rate of survival for big businesses at 97 percent, however in order for all of those large firms to stay afloat, they had to lay off 3.7 million people. In contrast, medium sized businesses actually added 2.2 million jobs during the Great Recession. Since that time, medium sized businesses have continuously increased employment year after year, all while helping to alleviate the pressures still plaguing the country today from the recession. The role of medium sized businesses in America are so vital, and yet so often overlooked – its time to start supporting medium sized businesses!

Types of Middle Market Loans

 Middle Market Solutions
Cash Flow Loans
Second Lien
Asset Based Loans
AR Financing
Subordinated Loans
Factoring
Unitranche

Middle Market Financing Uses

  • Innovation: The number one growth factor for middle market businesses is innovation. The type of innovation done from a middle market business will vary from industry to industry, however the overwhelming consensus from experts in the middle market business sector all agree that continuously working on innovative, creative services and products is key in generating positive revenue and expanding a middle market business. The three major steps involved with innovation include generation, selection, and implementation. According to the National Center for the Middle Market, 51 percent of middle market firms have a formal generation process in place; 59 percent of middle market businesses have a selection process in place; and 63 percent of mid-sized businesses have an implementation strategy in place to create and foster innovation – this is what is separating the top tier middle market businesses from the lower tiers. Focusing on implementing these three steps to great innovation is key in staying successful, and obtaining a loan to help put these processes and systems in place can help.
  • Payroll: In order to keep employees happy, especially since employees are the most important part of any middle market business, consistently paying them on time is vital. Many struggling businesses consider cutting payroll costs before other miscellaneous expenses, leading to an aggravated and disengaged workforce – which is the worst case scenario that can happen to any middle market business that increases business and productivity through innovation. In order to cultivate new and engaging products and services, there must be openness and a creative, engaging environment fostered by middle market business owners towards their staff. If a mid-sized business owner is struggling to cover payroll costs, considering the variety of financing options can alleviate this cost.
  • Hiring New Employees: Middle market businesses have played a significant role in increasing and retaining employees during a fluctuating economy; this is mainly due to the important role that hiring new, creative talent does for mid-sized businesses. Once again, hiring new employees ties back into the main idea that innovation is key for middle market companies. Most medium sized business owner’s welcome entrepreneurialism and innovation and are always looking for the next best talent to add to their innovation. Reviewing the variety of funding options below can help cover this necessary cost.
  • Expansion and Renovations: For any successful middle market business looking to expand, whether it is an expansion of a current location or the purchase of another storefront or office, there are a variety of loan choices out there to help make this transition easier. Most businesses, no matter the size, find that renovating their offices and storefront locations help draw in more customers, especially when trying to reach a younger demographic. Staying trendy and up to date is vital in a society dominated by judging a book by its cover.
  • Inventory: Inventory is not a necessity for every mid-sized business, however even if a middle market business is an office, there is still major inventory necessities (i.e. essential office supplies). Unfortunately, it is difficult to run an office without the basic office supplies, and often times, there is always a need to have a little extra on hand – especially if there is a great deal being offered by a supplier. Sometimes, the cost of inventory can be a burden, and during slow business periods, covering these unavoidable costs can be almost impossible. Remembering that there are endless amounts of financing options out there can make covering inventory costs easier.
  • Technology: Technology is the most vital investment for businesses of all sizes and in all industries – it is simply unavoidable. Over 58 percent of the top medium sized businesses in the United States today are planning on investing in more cloud computing services and software as a service technologies to increase production and help streamline important innovation. About 53 percent of mid-sized business owners claim that data analytics and business intelligence software’s will be their key investment in upcoming years, and 43 percent of mid-sized businesses claim that automation of business processes are much needed technological solutions. The list of technologies and software’s being produced to improve productivity across the middle market sector are endless, and by obtaining loans for these essential items, many middle market business owners will see improvements in their day to day operations, as well as future goals.
  • Marketing, Advertising and Social Media: Thanks to the evolution of technology, social media and marketing are unavoidable today, especially for mid-sized businesses looking to reach more customers. Focusing on customers and their needs are one of the top priorities for middle market companies, and the best way to reach those loyal customers is through effective marketing techniques – and in today’s technology driven world, social media is the best way to market anything. Many middle market business owners have so much on their plates, so considering a loan to hire marketing and social media help can be essential.

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