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Thursday, Mar 28, 2024

Alternative Lender Lets its Assets Do the Talking

There is no TAB Bank branch in the San Fernando Valley, no staff other than a vice president of business development who for the most part keeps a low profile. But the Utah-based financial institution hasn’t been busy with Los Angeles area clients. As an alternative lender to the large, national banks, TAB specializes in a client base made up of manufacturers and distributors that receive loans based on their assets and accounts receivable. TAB entered the Southern California market specifically for its strong manufacturing base and the distributors shipping goods in and out of the ports, said Brett Horwitz, the vice president of business development who works from an office in Encino. “It fits ideally with what we want to do,” Horwitz said. The lending environment is not an easy one for small- and medium-sized businesses. While traditional banks have the cash, they remain strict with their requirements that struggling companies cannot meet. That is where TAB Bank can step in, Horwitz said. The bank provides financing in two ways – factoring and asset-based lending. Factoring works when a company gives accounts receivable to the bank. For example, if the company sells $50,000 worth of product to a large retail chain, rather than waiting 45 to 60 days for payment from the retailer, the company gives the invoices to TAB Bank and receives a loan for 80 to 85 percent of the invoice amount. Eventually the retailer pays the $50,000 to TAB, which subtracts the original loan amount and its percentage and gives the balance to the client company. Asset-based lending uses equipment or the accounts receivable as collateral for a loan that is paid back directly by the client company. Valley area clients include Intermetro Communications, a Simi Valley provider of enhanced voice and data communication services using voice-over Internet protocol networks. The bank also extended a line of credit to Calabasas alternative lender Fast A/R Funding to go toward future growth of that company. What is different about TAB, Horwitz said, is that it’s an FDIC insured institution. So when a client is ready to migrate away from factoring or asset-based lending, TAB can give a traditional loan as well. “We have the commercial finance back office with more people to closely monitor the collateral and that allows us to lend more and give more liquidity,” Horwitz added. TAB (an abbreviation of its previous name Transportation Alliance Bank) is owned by the private FJ Management Inc., an Ogden, Utah-based conglomerate that also owns truck stops, convenience stores, energy investments and an insurance businesses. As of March 31, the bank had $703 million in assets. As the main point of contact for TAB in Los Angeles, Horwitz said he has to overcome misconceptions about asset-based lending and factoring from those who are not familiar with it. He receives referrals from bankers, lawyers, accountants and other advisors who have to some extent covered the basics with their clients, Horwitz said. “There is a lot of education required in helping people understanding the day-to-day operations that go along with this lending,” Horwitz said. Unscheduled Bank For more than a year, signs have announced a new branch of First Republic Bank on Ventura Boulevard in Encino. But that’s all there is at the location – signs. So, is this branch – the second in the San Fernando Valley for the San Francisco-based financial institution – ever going to happen? According to First Republic spokesman Greg Berardi, yes it will. Berardi, however, wouldn’t say why it was taking so long for the branch to open at 16652 Ventura Boulevard. “The length of the process varies from location to location,” Berardi wrote in an email response. First Republic has a location in Studio City. It has a total of 63 branches in California, Oregon, New York, Massachusetts, Connecticut, and Florida. Sold off in 2010 by Bank of America, First Republic has been on an aggressive growth posture since becoming independent. In addition to the Encino location, the bank also plans on opening new branches in San Diego, Cuperino, and two locations in New York City, according to its website. Staff Reporter Mark R. Madler can be reached at [email protected] or (818) 316-3126.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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