Finding Opportunity in ‘Sub-Servicing’— Gateway Commercial Finance Launches Sentinel Portfolio Solutions
As many companies turn to outsourcing in order to improve processes and reduce expenses, Gateway Commercial Finance expanded its sub-servicing reach by launching Sentinel Portfolio Solutions.
In April 2013, Gateway Commercial Finance re-branded its Growthshare Commercial Services to Sentinel Portfolio Solutions.
“We initially started Growthshare Commercial Services in 2009 at the request of a local community bank that wanted to discontinue the use of the Private Business Program and board the balance of their portfolio with us,” says Marc J. Marin, managing director of Gateway Commercial Finance.
“The bank recognized the immediate benefit of utilizing our proven policies and procedures in factoring and felt we would be an ideal partner to service their factoring portfolio,” continues Marin.
Outsourcing is not a new concept and has grown dramatically each year as companies look to improve processes while reducing expenses.
Marin explains, “Outsourcing is all around us. Technology companies outsource programming, hosting and data center operations. Accounting and financing is being outsourced at a record pace with personal tax returns being at the forefront. We’ve all had to call customer support on a product issue and likely reached a help desk that was outsourced.”
Companies generally look to outsource a component of their business in order to focus on core activities, cost and efficiency savings, reducing overhead, operational control and staffing flexibility.
Marin founded Gateway Commercial Finance in 2007 after a successful seven-year run with BFS. “The stars somewhat aligned when we formed Gateway. My equity partners were eager to support my launch, and I had a decent reputation with my senior lender at the time, so money was the least of my worries when we started,” Marin explains.
Since its inception, Gateway has embraced a conservative approach to underwriting and has remained committed to ensuring proper staff levels that contribute to exceptional collateral evaluation, monitoring and ultimately collection.
“We’re very fortunate among our peers to have recorded less than 0.001% in write-offs with purchases exceeding a quarter of billion dollars since our inception. We’re certainly not the biggest player in our space, nor are we a mom-and-pop anymore. I think we’re perfectly positioned to become a $100 million to $200 million in annual purchases player,” Marin adds.
In 2012 and 2013, Gateway Commercial Finance received recognition by INC Magazine as one of the fastest growing privately held companies in the United States.
Fueling Sentinel’s Launch
The decision to fully re-tool and rebrand the sub-service was born out of several emerging opportunities. First was the void in the asset-based lending and factoring space for a true sub-servicer capable of transactional or full platform support.
The second was to take advantage of a growing market segment in C&I lending. “As competition to start lending to SMEs ramps up, community banks simply can’t afford to build a department and associated infrastructure to support asset-based monitoring requirements when spreads are at all-time lows,” he adds.
Marin explains the benefits of Sentinel by noting, “Many lenders offer re-factoring where a borrower can lean on certain support functions in tandem with their borrowing. Sentinel Portfolio Solutions offers asset-based lenders, factors and other specialty lenders with their own capital base a unique opportunity to take advantage of full or specific support functions at a fraction of the cost of building a platform, hiring and training personnel, creating infrastructure or the like.”
Sentinel believes it is one of the first to offer standalone sub-servicing support to other factors, asset-based lenders and specialty finance companies. Gateway’s experience as a national factoring company proves that to perform certain tasks correctly, you need access to specialty resources and more importantly qualified people.
“Gateway was founded in part by the mortgage servicing industry. Today, one of our original founders provides sub-servicing functions for the fourth largest mortgage servicing company in the United States. I’m confident in saying we have the requisite skill set and methodologies to help ensure the success of our clients,” says Marin.
Part of the unique value proposition that Sentinel offers clients is its daily front line experience. “We’ve truly been in our client’s shoes,” says Marin. “Every day, we’re on the front line working our own portfolio, establishing best practices and passing on our processes and experience to our clients. Our clients avoid the potentially painful headache of learning it for themselves.”
The menu of services offered by Sentinel range from underwriting support, legal documentation, portfolio software, daily client servicing, cash posting, borrowing base generation, debtor notification and default support. Sentinels services revolve around three key areas:
Transactional Engagement is designed to support workload fluctuations where specialty support services are needed on an interim or emergency basis. This may include high workload boarding’s, debtor notification and re-notification, third-party verification, collateral monitoring and testing and worst case, workout or default support.
Knowledge Process Outsourcing is offered to those funders and lenders that would like to benefit from a second opinion on underwriting, transaction structure, internal process and operational reviews or compliance monitoring.
Platform Services is designed to position an entrepreneurial lender, bank or other factor to immediately benefit from Sentinels operations platform. “Our Platform Services truly delivers a turnkey solution to entering the asset-based and factoring markets, efficiently with all of the necessary bells and whistles of an established firm and without the significant cost associated with a start-up,” says Marin.
In the future, Marin hopes to position Sentinel to provide support services to foreign lenders that need monitoring and collections support in the United States. “I envision offering a similar suite of products as Factors Chain International but on the ‘light side,’ so-to-speak,” Marin says.
Gateway and Sentinel are preparing for future growth. In August of 2012, Gateway relocated to Delray Beach, FL, doubled its space and hired additional personnel to support its objectives. In May of this year, Gateway renewed and increased its credit facility with First Tennessee Bank to support new business development objectives.
“As banks begin to re-balance their lending portfolios and gravitate towards a more reasonable mix of real estate and C&I lending, there certainly will be more opportunities for factors and asset-based lenders,” says Marin.
Analia Miguel Gentile is the Internet Marketing Manager at Gateway Commercial Finance and has more than 14 years of marketing experience. She holds an MBA in e-commerce from the University of New Brunswick, Canada and a bachelor’s degree in accounting from the National University of Cordoba, Argentina.
Marc J. Marin is the founder and managing director of Gateway Commercial Finance. He may be reached at 561-734-2706.