Troubled Water Opportunities: Building Special Assets Relationships


Building relationships with local loan officers is a “given” for factoring and business finance consultants.  In fact, for true industry networking professional in our industry, it may be #1.  But when discussing loan officers and relationship opportunities, there is one bank’s loan officer who towers above the rest.  And that is the “Special Assets Loan Officer”.

Special Assets Loan Officers (SAOs) have the unique task of managing and addressing loans that a bank wants to get rid of due to non-compliance or other risk issues. It is often referred to as a “workout officer” and their primary role involves working with troubled loans, assessing risks, implementing strategies to mitigate losses, and potentially facilitating loan modifications, refinancing, or liquidation processes to resolve the non-compliance issues or deficiencies associated with those loans.  In cases where a customer’s business cannot be brought into compliance, it is also the job of the special assets officer to find the loan a new home.  And, in many instances, that new home can be a factoring facility provided by you.

Opportunities in Mergers and Acquisitions

When a community bank finds itself acquired by a larger lender, especially in times of financial distress where regulatory bodies like the FDIC step in, the transition can introduce a myriad of complexities. One of the most pressing challenges often revolves around the management and disposition of “relationship loans” that do not align with the compliance standards of the acquiring institution.  Relationship loans, which are primarily based on personal relationships rather than stringent financial metrics, are a hallmark of community banking. These loans often reflect the intimate understanding community banks have of local businesses and individuals. However, in the context of an acquisition, these loans may not meet the stringent compliance, risk assessment, and underwriting criteria of larger, more institutionalized lenders. This discrepancy can potentially “trigger” concerns around risk management, regulatory compliance, and financial stability, necessitating a comprehensive assessment and strategic approach.  In short, finding new homes for such relationship loans can become a “wholesale” operation for special asset officers.

DIP Funding Expertise: A Competitive Advantage

The expertise of true professional factoring consultants extends beyond traditional small business financing and specialized capabilities and can provide opportunities such as Debtor-in-Possession (DIP) funding in critical situations necessitating Chapter 11 financing. DIP funding, facilitated by the expertise, insights, and collaborative engagements between factoring brokers and SAOs, serves as a linchpin in preserving enterprise value, facilitating operational continuity, and orchestrating successful restructurings or reorganizations amidst financial distress.  Factoring brokers and consultants should assign a heightened valuation to their relationships with SAOs and especially those in their community. In troubled times such as now, a strong relationship with special asset officers can mean exceptional opportunities for brokers and consultants.

An Out-of-the-Box Marketing Opportunity

For all brokers and commercial finance consultants, harnessing occasional “out-of-the-box marketing opportunities” can significantly amplify your income for not only for a few months, but actually for years to come.  And designing a relationship building campaign with an Special Assets Officers (SAOs) target and focus is one you should elevate to “high priority” for 2024. Factoring brokers possess a unique vantage point, equipped with insights, expertise, and capabilities that resonate profoundly with the needs of SAOs operating in terrains of distressed assets, restructuring, and financial optimization.  By strategically targeted networking and relationship-building campaigns focused explicitly on SAOs, brokers can position themselves to be immediately available in when opportunity comes knocking.