Getting Creative With Loan Structures

In 2017, Landry Oil Services* was having trouble obtaining a loan. The 25-year-old Louisiana-based oilfield services company needed to invest in technology, new equipment and geographic expansion, but found lenders in the area were averse to lending to an oil and gas company. Then John Landry, Owner of Landry Oil Services received a recommendation to connect with Cardinal Capital. They reached out to Cardinal Capital in mid 2017 and partnered in late 2017.

Cardinal Capital’s deal with Landry Oil Services is just one example of how the company sees opportunity where others can see red flags. I sat down with Chris Reid, Partner with Cardinal Capital, to learn more about the firm’s strategy.

What is Cardinal Capital?

Cardinal Capital is a commercial finance consulting firm.  In short, we help companies obtain and manage their funding.  Ninety-nine percent of what we do is debt based serving the small to mid-cap markets across the United States. We seek a fit between our clients and funding whether that is asset-based revolving debt facilities backed by inventory and accounts receivable, factoring lines for accounts receivables, term loans backed by machinery and equipment, real estate and intellectual property, in amounts ranging from $250,000 on up. Our mission is to provide clients with the right kind of capital so they can achieve their goals. 

What differentiates Cardinal Capital from other lenders in the market?

We don’t lend directly.  We work with lending institutions like banks, insurance companies, pension funds, etc. to find debt structures that help our clients.  Additionally, our team is not made up of bankers. Cardinal Capital’s team is comprised of individuals who have extensive backgrounds in company operations, marketing and corporate finance so we look at transactions objectively from an operating and our client’s standpoint. We are industry agnostic because basic business process applies across all industries. Partnerships are successful when you can structure financing solutions cooperatively with a borrower, and then the borrower is able to manage expenses and execute its business according to its plan and timeline. We don’t assume risks in the same way that most lenders do given their lack of operational experience and lack of creativity when structuring a financing product.

What is the typical journey that leads borrowers to Cardinal Capital?

Many of the companies we service have historic operating losses, are scraping together resources, and realize they’re in a bind. They have a compressed timeline. Companies will typically look first to banks, often to no avail. Due to compliance and regulations, banks are looking for clean credit with little risk. Then these companies seek us out.  This is where we shine.  We have over 4000 sources of funds and we go to work.

What advice can you give to company owners?

Obtaining a loan does not happen overnight. Even in Cardinal Capital’s case, it can take months, although we have performed a few miracles under a month. Finding a company like Cardinal Capital who can get the company to trustworthy lenders is also key, as a debt raise is difficult to do without good contacts in the finance industry.

Be open-minded to debt. An appropriate amount of debt can help launch a company to new heights through top line sales improvements, improved processes, improvements to hard infrastructure, and improvements to workforce quality.

Avoid paralysis by analysis (to quote Cardinal Capital’s Partner, Gary Anderson). Don’t spend an extraordinary amount of time analyzing debt offerings and continually going out to the market in an attempt to determine that you achieve the best price. CEOs rarely factor internal and external opportunity costs for the perpetual delay.

Contact Cardinal Capital today at 225-308-3700 for more information.


*Name changed on this case. 

Cardinal Capital, LLC, Financial Consultants  No License Required, Baton Rouge, LA