In this new feature, Charlie Perer meets with national originations executives to discuss the state of new business origination in the commercial finance industry, the dynamic nature of the role and general market dynamics. The purpose of this series is to hear from a group of leaders who focus specifically on transaction originations and manage BDO teams to gather their market views and how they are positioning their business for success.
Here to tell the story are Jim Marasco of Gibraltar Business Capital, Nick Payne of Siena Lending Group, Brandon Barr of CIBC US Asset-Based Lending and Joe Kwasny of Huntington Business Credit.
Charlie Perer: Please briefly introduce yourselves.
Brandon Barr: I lead originations and underwriting for CIBC’s US Asset-based Lending (ABL) Group. I started my career at LaSalle Bank here in Chicago, and have been with CIBC since 2011 (previously, The PrivateBank). I’ve been fortunate to have worked in several areas across the banking landscape from workout, lender finance, private banking and ABL. It’s been a bit of a non-traditional ABL path, but I believe it fits today’s environment where creativity wins, and a broad understanding of bank capabilities is valuable.
Joe Kwasny: I am Joe Kwasny, and I am Senior Vice President and Managing Director of Business Development for Huntington Business Credit (HBC), the asset-based lending division of Huntington National Bank. My entire 37-year career has been in banking, of which the last ten years have been in ABL and twenty in numerous management roles. I’ve held leadership roles in asset-based lending, floorplan lending, specialty finance lending, retail industry lending, large corporate and middle-market banking.
Jim Marasco: I joined Gibraltar Business Capital (GBC) as Head of Originations in April 2023. GBC is a non-bank lender owned by Hercules Capital. (Previously, I held a similar role at Wells Fargo Capital Finance, managing a national team of originators and syndication professionals. I started my sales career as a BDO at Foothill Capital Corporation and earned elevated roles in leadership and management over three decades with the company.
Nick Payne: I joined Siena Lending Group in 2015 as a Senior Vice President for originations and was immediately tasked with launching the Midwest market. I now currently help lead the origination efforts for the platform. Siena is a non-bank commercial finance company owned by Benefit Street Partners, providing asset-based loans between $10 and $100 million to small and middle market businesses across the United States and Canada. Prior to Siena, I launched the Midwest market for Nations Equipment Finance (now SLR Equipment Finance) and worked for Van Eck Global in their PWM and RIA sales channels. I started my career at Morgan Stanley in their Equity Sales and Trading division.
Perer: How would you describe your role overseeing national originations?
Marasco: I see my role as a coach, mentor and motivator for my team. In this capacity, I guide their calling efforts, make joint sales calls and work with them to evaluate and structure prospective transactions. I place a ton of trust in my well-trained team; knowing that they are calling and communicating actively and transparently with financial sponsors, the referral community and their prospects. Further, I serve as the link between originations and credit, providing transaction support during all phases of the deal process.
Kwasny: My job is to ensure we are appropriately covering the nation and positioning Huntington Business Credit for identifying and onboarding new client relationships. This includes being a recruiter, attracting the right business development talent and positioning them for success with a tailored strategic marketing plan for their specific markets. It also requires being hands-on to assist with targeted calling efforts and pitching and negotiating new credit structures. Lastly, and the least glamorous task is serving as administrator and internal bank ambassador for the marketing, new business development and sales efforts of Huntington Business Credit.
Barr: Given my varied background, my role is two-fold: First, I bring the full background of bank capabilities and industry expertise to our markets where our business development officers compete. Second, I work with our highly experienced, well-networked team to execute efficiently with an eye towards long-term relationship development. I learned early in my career at LaSalle Bank that everyone you meet is a potential client, prospect or referral source and you should engage in each discussion with a goal of bringing your network to theirs.
Perer: How has this role evolved over the past ten years and how is it going to evolve in the next ten?
Kwasny: The addition of non-bank lenders in the market has required asset-based lenders to be more creative in competing and winning new business. The growth of HBC has required strategic hiring to support a national calling effort. As a national group, training, developing culture and empowering new hires for success is critical to deliver a consistent service level.
Marasco: This has always been my approach, and it will likely not change significantly over the next decade. More than anything, I think it is imperative to provide senior leadership presence to support the originators in their interactions with deal sources, sponsors, prospects and internal stakeholders.
Barr: Each financial institution takes a slightly different view towards a national originations role. I envision this role evolving into a connector across the bank’s entire national footprint where I need to understand the competitive advantages across all facets of our U.S. and Canadian businesses, not just asset-based lending. CIBC offers best-in-class services that meet the unique needs of the private economy in the U.S. from ABL to equipment finance, investment banking, specialty finance, innovation banking and private wealth – just to name a few. My focus over the next ten years will be to further connect these services to our prospects, clients and referral sources as each company has unique needs that aren’t always solved with a singular focus.
Perer: What is your team’s go-to-market approach?
Barr: We have various channels that we cover from private equity, turnaround consultants, investment banks, direct calling and our commercial partners. As the market shifts, we place emphasis on different channels. It is important to have key centers of influence in each channel that provide quality and sound market insight as to what they are seeing and when. Those relationships also help you “look around the corner” before others get there.
Payne: Siena is and has been a believer in a relationship-driven marketing approach. We rely heavily on the relationships that our BDOs have built and cultivated, in some cases, for decades. We take seriously our responsibility to communicate early, often, and effectively and to execute on expressed terms.
In addition, we are believers in the ‘shotgun’ approach with referral sources. We cast wide nets and strive to develop relationships with individuals in varying professions that may play a key role in an ABL transaction.
Kwasny: Our go-to-market approach is built on the experience of our team, our speed to market, and by providing our clients and prospects with access to decision-makers. Our core team at Huntington Business Credit have been working together for over 20 years. Prospects and clients notice the familiarity we have with each other and recognize the confidence in our conversations regarding credit structure, industry experience or general inquiries. Often, we can finish each other’s sentences. This is re-assuring and an important part of building rapport and trust with a client or prospect.While Huntington Business Credit has grown, we have maintained a flat organization and leadership structure. This translates to SPEED in getting out proposal letters, responding to requests and closing deals. It’s our flat organizational structure that allows us to introduce decision makers to our clients and prospects.
Marasco: With a small team of originators placed in most of the major markets, we maintain a traditional, regional coverage model. From there, we tailor our calling efforts based on conditions in each geographical market. We focus calling efforts and media campaigns on the most active areas: turnarounds, acquisitions, growth financing, or bank refinancing based on the trends we monitor. Serving the financial sponsor community is our major focus and has yielded great results for our clients and our firm.
Perer: Is the focus on establishing lending verticals a positive for BDOs long-term or does it just narrow a generalist’s calling effort?
Kwasny: It is a positive. We are at our best when we provide insight to help our clients achieve their goals. By combining industry expertise with asset-based lending expertise, we deliver a more comprehensive and value-added solution. This value-add results in a stronger client/bank relationship, which is our goal. We are privileged to have many long-standing relationships that choose to remain with Huntington Business Credit in an extremely competitive marketplace.
Marasco: Some lending verticals are necessary because specific industries require expertise and a specialized monitoring approach. Healthcare, retail and tech require deep industry knowledge and constant attention to understand the dynamics. We don’t employ a vertical strategy. Instead, we avoid only a few industries where we lack the expertise to lend, such as healthcare. A vertical approach can divert a BDO's time from maintaining a more balanced, generalist coverage plan. And when their assigned vertical is not “hot,” they are challenged to re-establish deal flow from generalist sources.
Barr: We are generalists by nature and not vertical-specific. It provides us with proper granularity by industry and geography, as well as a better view towards risk management when you step back and look at the portfolio as a whole. Our team – BDOs included – have built a very sound reputation within the ABL space. We have a reputation as being fair, pragmatic lenders who view a situation through the eyes of the owner.
In addition, we have a portion of our portfolio dedicated to early-stage turnarounds. While we have successfully used this “bucket” for 20-plus years, we believe it will continue to be utilized effectively in the current market environment. This portfolio carve-out provides the opportunity for us to compete against our non-bank ABL peers that have grown to be fierce competitors over the past ten years.
Payne: Verticals can be the right approach for the right team. Size of team is a key consideration. Many non-bank ABL teams run very lean. It’s just a part of their model. For those lenders, specificity may not be as valuable since the focus is really on consistent coverage and casting wide(r) nets. For the BDO, I would argue that specificity certainly doesn’t hurt you. You can get really smart in an industry, say aerospace, but still be effective on retail deals. Now when that aerospace opportunity comes along, you are going to impress on calls with the management team and referral source. That is going to help you build rapport and ultimately be a consideration in the sale. So long as being an ‘expert’ in one vertical doesn’t preclude the BDO from being a ‘generalist’ in another, then I think it’s in everyone’s best interest within the organization to promote proficiency within a vertical.
Perer: What is the biggest misperception regarding the role of a BDO?
Barr: The biggest misperception is BDOs are not credit focused. Our best and brightest BDOs originate with their credit hats on. They mitigate risk effectively, patiently structure and push where necessary. Our BDOs are formally credit trained and use that base of knowledge effectively to identify risk, mitigate it, and highlight those structural elements to our internal constituents before negotiating with the client.
Kwasny: I would point out two that I frequently encounter: One is that deals are just handed to BDO’s – or “fall from the sky.” To be successful as a BDO, you must be diligent and disciplined in your calling efforts and developing your value proposition. Only through these efforts are you going to have a successful long-term career. The second misperception is that successful BDO’s are “sales guys” or “bird dogs.” To be successful as a BDO, you must understand the credit features and benefits of an ABL facility. The ABL BDO needs to be able to educate and articulate the features/benefits of an ABL solution and how it will support the company’s working capital needs.
Marasco: Some people think BDOs are just “bird dogs,” looking for leads and then flipping packages into their companies for others to evaluate and execute. Successful BDOs have strong credit skills and can provide end-to-end solutions. A strong BDO can dig in and quickly understand the credit issues in a deal, determine if it fits the organization’s credit parameters, clearly explain the opportunity internally, and deliver the appropriate structure to the prospect.
Payne: That we’re out here having fun all day, or that the job is easy. Sure, the role can be fun but so can any other role. This job is tough. The people need to be tough. It’s not easy to get the stuffing beat out of you on a deal one day and then the very next day walk into a room full of people (including your competitor to whom you lost the deal) with a smile on your face, ready to tell a funny story. This is a grind and the people who do it day-in and day-out should be commended for their efforts.
Perer: What are the areas in which most BDOs fall short (i.e., networking, credit, etc.)?
Kwasny: If it was only that easy! We all have our own strengths and weaknesses, whether it be the depth of our network, drive, ambition, knowledge, credit, or some other attribute. But our most successful BDO’s leverage and lean into their strengths, and just as importantly are aware enough to use internal resources to assist in the areas they are not as skilled.
Marasco: A frequent weakness I’ve seen is a lack of experience and interest in understanding due diligence requirements to underwrite and approve new transactions. Also, many BDOs have not had sufficient exposure to legal documentation and the negotiation of intercreditor agreements. Another important element of a BDO's success is to have a strong grasp of the product they can deliver. It is not easy to be successful if you do not understand what your organization is willing to do or if you cannot accurately and confidently translate that to sponsors, referral sources and prospects.
Barr: All BDOs and bankers alike have areas where they are strongest and areas requiring improvement. That is why within our team we seek to have a balanced, team approach to new deal reviews and execution. Given our ABL team is an intentionally flat organization, we have decision makers involved at an early stage to review a deal all the way through credit approval and funding. This gives our BDOs the opportunity to understand our initial appetite for a new transaction, what diligence items we believe our credit partners are going to focus on and what portfolio history we have with the existing industry, structure, sponsor, etc.
Payne: I’ve seen a mixed bag. It depends on where you’re recruiting. Banks? If they are already a BDO, they are going to be a fairly complete package. Some will lack a robust network outside of their own bank, but that’s nothing that cannot be overcome. If they have not yet worked their way into a BDO position, then networking/sales skills are going to be an area of focus for me in the interview and, potentially, as their manager. On the flipside if you are recruiting from factors, other non-bank lenders, or from outside the industry; generally, these folks will need to brush up on their credit skills. Again, something that can be taught if the individual is willing to put in the time and effort to learn.
Perer: Why does the position arguably have the highest attrition rate in lending?
Marasco: It’s a hard job! It’s stressful and demanding, and results are easily and frequently measured precisely by dollars funded. Virtually every ABL lender will give a BDO 18 to 24 months to build their network and generate and close deals. Some are uncomfortable with the pressure of carrying sales goals. In those cases, they may be better off seeking a role in underwriting or a portfolio management capacity. Also, several banks and lenders have not been actively lending due to constraints caused by the recent regional bank turmoil and funding issues. As such, those BDOs are unable to confidently pursue new business and end up leaving for greener pastures.
Payne: It’s a tough job. So many reasons. Let’s start with the fact that you can do everything right and still fall short. You can have the credit background, you can have the personality, the resolve, the chutzpah – and then the market can tell you ‘Not this year.’ There are simply factors that are outside of our control as individuals and BDOs. Maybe the market is tight, and banks want to dip down into non-bank credit territory (or vice versa). Do you know how hard it is pitching SOFR + 450 against a bank pricing the same deal at SOFR + 250? There’s not enough ‘structure’ in the world that’s going to overcome a 200bp delta (I don’t care what your sales manager tells you – it’s not happening). Don’t get me started on platforms that want above-average results from BDOs with a below-average product. We are only as good as the resources that are at our disposal and the external conditions within which we must sell.
Kwasny: A consistently productive BDO is a valuable and well compensated resource for any team. It is also an exceedingly difficult job and one that experiences the ebb and flow of deal volumes and successful closings. Asset-based shops are always looking for strong BDOs. You couple the sought after status of BDOs with the ebb and flows natural in the job, and very often if you catch a BDO at the right time, they may be open to be lured into a new opportunity.
Barr: A job as a BDO is easier said than done. They are always “on.” From networking events to referral source meetings, to internal memos and credit discussions, they are tirelessly working to manage the process for prospects and customers. I very much respect the successful BDOs who have spent decades refining their craft. They know time is not your friend in a deal process, a deal can be lost at any stage, and diligence, while necessary, creates potentially new challenges to overcome. We work hard to support our BDOs within our team because they are the lifeblood of our group. Without their skill, tireless work ethic, and willingness to take a Friday afternoon meeting or an early Monday breakfast, our business couldn’t thrive and grow.
Perer: How are you leveraging technology and what tools do you find successful?
Barr: We’ve had a bit of a youth movement across all facets of our team within the last 24 months from originations, marketing, portfolio/relationship management, etc. This has brought new ways of originating and embraced old ways just the same. As much as I would like to engage every new technology service provider within SFNet, we have had measured success with tools that help us better identify customers, engage with them, and develop strategic relationships.
Kwasny: Unfortunately, we still rely more on “meat and potatoes” calling efforts for the bulk of our business development activities. Having said that, we have seen success with advanced features of LinkedIn as a means for qualifying prospects, researching, and ultimately making introductions. We also have been working with AI to identify products and service needs based on profile and behaviors. We are also currently developing digital lead generation solutions.
Marasco: I rely heavily on our CRM system and expect my team to be active users. The calling and coverage metrics help optimize and monitor the team’s efforts. It may sound simple, but I also research everything about a prospective borrower online. Access to news outlets and social media to research the companies and management has enhanced the due diligence process.
Payne: For us, we are always striving to leverage technology and automate pieces of the business where it makes sense. Our entire portfolio management system has been built from the ground up internally, and we’re very proud of that. Like most others, we leverage our CRM to the best of our ability but that’s an area where we can certainly improve. We have not been keen on some of the newer email technologies that are available, but we have started to come around to some of those. The insights that we could gain would allow us to be more strategic with our time.
Perer: What are the attributes you look for when hiring BDOs?
Barr: There is not one strategy that fits all BDOs, so keeping an open mind as to how successful BDOs cultivate referral sources, originate transactions and develop relationships is important. Non-negotiables for me include a strong reputation in the marketplace, willingness to be a team player and integrity.
Marasco: I look for a combination of strong deal-making and credit skills along with a proven network of referral sources. Also, I seek those who can communicate naturally and authentically. Excellent listening and problem-solving skills are also key to success. After all, we are problem solvers and solution providers at the end of the day.
Kwasny: As I mentioned earlier, our team has been working together for a significant period of time. This has generated a culture that we operate within, and it guides everything we do. In addition to being a strong candidate with tangible attributes (network, history of success, etc.) positioned to generate new deal flow, it is important that the BDO shares the same vision for their role, and the team. It is so much easier to accomplish goals when you have a shared vision, and everyone is pulling in the same direction.
Payne: I do not believe that a great BDO comes in a pre-packaged box. It’s not as easy as saying ‘you took this course and got this grade, or your resume shows that you did xyz’ and then that person is going to be a slam dunk fit. Sure, all successful BDOs have certain traits in common but their strengths and weaknesses typically vary. Persistence and resolve are key. Those are non-negotiables. This job will beat you up and spit you out and we need to make sure that the folks that we put into these positions can rise to the challenge. Overlay cultural fit onto all of this and effective hiring becomes more of an art than a skill.
Perer: Do you ever equate your job to coaching in sports from the sense of building a team in a competitive world?
Barr: Funny you ask this question as with all my free time I coach my two boys in travel basketball. There are a lot of parallels to this role and coaching in the competitive environment we operate in. Over the past fifteen months we have made changes to the ABL originations team by adding six seasoned BDO team members. Similar to coaching basketball, my view is recruit, onboard and nurture the best talent possible, setting the team up for maximum success. If done properly, I have removed obstacles for the team and I have them squarely focused on serving their marketplace. Of course, the good news is I don’t have to yell at our BDOs to box out and play defense like I do with my eight- and ten-year-olds!
Marasco: 100 percent, a winning team has players that trust and support each other. BDOs, by nature, are competitive and sometimes do not want to share contacts or market intelligence. We have a small team spread across the country, and we talk regularly about what we are seeing in the market with the expectation that it will produce stronger results for all.
Payne: All the time. Greats like John Wooden take an approach that transcends sports. This guy won 10 NCAA men’s basketball championships (and 7 in a row!). “You can’t let praise or criticism get to you. It’s a weakness to get caught up in either one.” Now what does that have to do with basketball? Nothing. And everything. Same for ABL. It is important that our originations team is comprised of high character, like-minded people who want to win. It’s important to have fun (sales retreats), work hard at practice (contribute to idea-share on weekly pipeline calls), and execute (win and close deals).
And then there’s this Nick Saban quote…“What I would like for every football team (competitor) that we play is to sit there and say, ‘I hate playing against these guys (Siena). I hate playing ‘em. Their effort, their toughness, their relentless resiliency to go out every play and focus and play the next play and compete for 60 minutes in the game -- I can’t handle it.’...That’s the kind of football team (originations platform) we want.”
Kwasny: Yes, I have been known to say I learned more playing sports than I ever did in school. Maybe that says something about my grades or educational aptitude, I do not know. But seriously, there are a lot of similarities in coaching a sports team or a business team trying to accomplish their goals. You must prepare, put in the work, execute your strategy or plan and be flexible to adapt to the situation as it unfolds. If you do all these things, you WIN! Our team loves to win and hates losing.
As a manager, I spend time reviewing events. What worked, what did not work, why did we win (let’s do more of that) and why did we lose (let’s try to not do that again). The competitiveness of business development and competing for deals is what keeps the job fun and exciting.
Perer: Has the pool of qualified applicants increased or decreased over the past ten years and why?
Marasco: The pool has decreased. Young people rarely choose a career in banking as they did when many of us started in the business. That said, there is hope that we will see more interest in lending, given the broader visibility of non-bank lenders and private credit. On a relative basis, these lenders have less compliance and regulatory burdens than banks and can represent an attractive career path for younger job seekers.
Kwasny: I think most people in the industry would suggest the labor pool is getting older and smaller through retirements and reduced new bankers. The industry is facing the challenge of developing the next generation of leaders. Why? Asset-based lending is a technical sale. To be successful as a BDO you need to be able to sell the features and benefits of the credit structure and how it assists the client in managing working capital. The traditional way to develop into a BDO is by growing your career in asset-based lending through field examination, underwriting and account management prior to sales. Many younger professionals are looking for more instant promotions and have elected to pursue other financial services roles.
Perer: How is the bank-ABL BDO job going to evolve as ABL continues to become a product instead of a business?
Barr: CIBC’s ABL team is a line of business within the bank. We squarely want to remain this way. I’ve found the shift to ABL as a product has affected the continual network development and relationship-building scrappiness an external BDO needs to be successful. I want our team to build relationships leading to trusted advisor status versus being more internally focused.
Kwasny: At Huntington Business Credit, we remain a business line and vigorously defend that model versus moving to a product. Having said that, my impression is that the BDO role in a product environment becomes more of a structuring and credit underwriting position versus business development. For traditional BDOs the change would be significant.
Marasco: Coming from the bank world and witnessing the productization of ABL, there remains an opportunity for banks to train BDOs to work with commercial lenders on new opportunities. On the other hand, and less virtuously, some banks have and will obviate the role of the ABL BDO by ceding the responsibility to prospect, sell, and deliver an ABL solution to commercial bankers.
Perer: Ten years from now will there be more non-bank BDOs or less?
Marasco: More. As the non-bank world continues to attract capital, BDOs will be needed to represent non-bank firms.
Kwasny: Non-bank asset-based lenders have increased and carved out a specific niche in the market. I do not think it is logical that they will continue to enter the market at the rate we have seen in the last few years. However, they are here to stay, and my sense is that the number of players will remain fairly consistent going forward with players entering and exiting the industry.
Payne: It’s hard to say really. I think it depends on when the market has decided we are ‘over-subscribed’ on lenders in the space. Even then, I could see specialization (industry, or other) become a more common practice within the non-bank segment. On the other hand, there’s the long-awaited fintech revolution that would dial back the need for human intervention in lending. I don’t see that as likely and thus, I’m going with more BDOs.
Barr: Charlie – if I had a crystal ball and could accurately predict tomorrow, let alone 10-years from now, I would predict I would be doing something very different!
Perer: What is a perception you have about today’s ABL market that is not widely shared?
Barr: ABL is best suited as a line of business versus a product. Some of our best relationship developers across the bank are part of our ABL BDO team. Our team is rich with talent, has a depth of long-standing relationships, and wins differently than our commercial bank. While we have an excellent relationship with our commercial banking colleagues, our team wins by being a line of business. We control our process from our first marketing call to our closing dinner and subsequent relationship management. We learn the reasons behind client issues directly from the client. Our opportunity to structure and be creative is done in concert with an owner, CFO or Controller. Our customers and our external partners know what we need and why we need it. Our message is clear, direct and delivered to the decision maker to continually build a long-term partnership.
Kwasny: I think ABL as a product will continue to evolve. Twenty years ago, ABL came with a stigma and was viewed as a last resort type of financing. Today, especially in the bank environment, the structure is more accepted as an efficient way to manage working capital for asset intensive businesses. Today’s company CFOs have a dual responsibility to fund their organizations with an efficient cost of capital and provide flexibility in liquidity. ABL delivers in both. Today, we have clients who have the option to finance their operations in several financing structures but choose an ABL structure for those reasons.
I would not be surprised to see Banks lean more into ABL as they become more regulated, leaving the leveraged lending and cash flow financing to non-bank lenders.
Payne: That asset-based lending has not evolved. I think ABL has evolved considerably since its early days and particularly within the last decade. To say that there has been noteworthy interest from some of the world’s leading asset managers would be underplaying the influx of new players and the volume of capital that backs them. I expect this trend to continue. That said, I think the industry remains positioned for continued evolution with regards to structure and overall investment thesis into the assets on which we will lend.
Marasco: While the market is highly competitive, the middle market is vibrant enough for most market participants to be successful. Lenders with a well-trained originations team and defined market niche will continue to thrive.
This article first appeared on ABL Advisor: https://www.abladvisor.com/articles/37989/national-originations-panel