Perer: How important is mentorship and do you believe it is pervasive in the industry?

Anderson: Mentorship is a very valuable tool and can look different in the non-bank community (as opposed to traditional banking where things are more hierarchical). I find moments of mentorship with peers, competitors and colleagues. I think the traditional formal mentor-mentee relationship is less common nowadays, but it is always helpful to gain insight, best practices and wisdom from professionals that have more experience than I do.

Waggoner: Mentorship is extremely important, and I can’t stress enough how valuable my formal and informal mentors have been throughout my career. Finding a mentor is not simple or easy, but I’ve found that if you work to identify the gaps in your experience and express a real interest in learning and development, people are more than willing to step into that advisor role. While most banks and larger non-banks have formal mentorship programs, I believe that even the smaller firms do a good job of pushing their people to connect with certain individuals (either at their firm or within their network) who can offer a similar mentorship dynamic.

Tsitsos: I’ve had great mentors throughout my career and still lean on a lot of them today. It’s important to seek them out, pepper them with questions, figure out what makes them successful, and apply it in your practice. While formal mentorship programs may not be as common anymore, finding informal mentors (and mentees) is critical to your success and your organization’s future.

Cortes: I find mentorship extremely important, and I would not have developed professionally without it. I do believe it is pervasive in our industry, as I have only come across people who want to share their knowledge. There are so many experienced, talented, and smart individuals in our industry that want to pass on their expertise and provide guidance, that we would be doing them a disservice by not asking for their mentorship.

Perer: In your opinion, do you believe that it’s essential to have formal credit training, which many banks no longer offer, versus other functional experience (i.e., field exam)?

Anderson: Any functional credit experience is useful (whether that is formal training or field exam or underwriting). It helps to see concepts in real-world situations. In lieu of formal training, sitting in a role that gives exposure to a wide variety and high volume of deals is a good thing.

Waggoner: I think it depends on the goal of the individual. Functional experience will certainly play a major role in growth for that specific position, whereas formal credit training can offer networking and the opportunity to build a broader skillset which may apply to future positions in senior management. As someone who completed Wells Fargo’s Credit Management Training Program, I will say that it afforded me a chance to explore different groups and functions at the bank that I otherwise would not have been exposed to.

Tsitsos: If having formal credit training is not essential, it’s at least an advantage. It helps in providing accurate feedback in a timely manner and building trust with your clients.

Cortes: Although I think credit training is important to assess opportunities, I would have to lean towards functional experience being more valuable. That is not to say credit training is not needed, as they go hand in hand. Credit training sets the basis on how to view each opportunity and determine what the best structure is, while functional experience provides the foundation to understand collateral, financials, trends and what impact a lender could face if the risk isn’t assessed properly. Functional experience provides the repetition that is needed for one to fully grasp and understand the concept of ABL. I think by having the right leadership, someone can get the credit guidance that’s needed in lieu of a formal credit training program, while functional experience is very much a hands-on approach that cannot be replaced. Overall, both are needed to properly communicate with the prospects and garner support internally. However, if I had to pick one over the other, then functional experience would rank higher.

Perer: Does the ABL industry face a shortage of talent ready to take over for today’s leaders, and what can be done to attract more talented lenders to ABL?

Anderson: From my view, there are plenty of ABL professionals ready to step up to bigger roles (especially in the Midwest). As far as attracting more people to ABL, I would say give people with less traditional backgrounds a chance. Asset-based lending can be taught. Focus on whether or not the person has the right soft skills and the eagerness to learn. Many firms shy away from the heavy lift of getting someone trained up, but they could be missing out on great long-term employees that can step into leadership roles in the future.

Waggoner: I think that the industry is quickly evolving – the old school ABL structures that dominated secured lending for decades are not as prevalent in today’s market. Similar to today’s ABL leaders who grew up with black-and-blue ABL, I think tomorrow’s leaders are currently growing up in a new “hybrid” environment where the talent pool is similarly evolving to accommodate the future of the industry.

Tsitsos: I’ve met and worked with a lot of talented individuals that have experience in different job functions that will make great, well-rounded leaders. I would encourage today’s leaders to be proactive and reach out to their team members to find out what their goals and ambitions are and produce a plan to make it happen. It works both ways too—if you know what you want, let the right people know.

Cortes: Not sure I can say whether the ABL industry has a supply shortage of talent ready to take leadership roles, as we have so many talented people in our industry. I think the question really lies in whether certain talented individuals want and are suited for leadership roles. Just because someone is a high performer and talented, they may not be the best fit for management or leadership. Leadership is more than just having experience under your belt or being the top producer. I think it comes down to having passion and resilience, decisiveness and trustworthiness, empowering others, being an effective communicator, along with experience and execution. If anything, I think today’s leaders demonstrate all those qualities but have their work cut out for them in identifying and selecting those cut out for that next level in such a vast pool of talent. As for what can be done to attract more talented lenders, I feel like education would go a long way. Outside of our industry, few people truly know or understand ABL. Considering how prominent ABL has become over the last three decades, I am surprised that we do not have the same level of attraction as the big accounting firms. We need to find ways to create similar desire and excitement to become asset-based lenders.

Perer: What motivated you to become a Business Development Officer?

Waggoner: I’m an entrepreneur at heart and I believe that relationships are fundamental to both portfolio growth and to downside protection. The functions of the BDO role align with my personal values and give me the freedom to deliver financing solutions that make everyone happy.

Tsitsos: I need to be in constant motion and it’s the most multifaceted role within ABL. I like being client facing—traveling to meet with prospects and referral sources, building relationships, and being the face of my company. I like being on the front lines of structuring credits—balancing what you can execute internally with what will be competitive in the market.

Cortes: I won’t ignore the compensation potential being a big driver to wanting to become a BDO, as that certainly played a role. Although, the main motivation came from the rush and excitement that comes from closing a new deal. There is a magnetic energy working with a team to get a deal across the finish line. I’m not sure how else to describe it, some call it being a “deal junkie,” so I guess being a deal junkie is what motivated me most.

Anderson: I enjoy connecting with and building relationships with people. Moving into a Business Development Role enables me and rewards me for doing that. I believe that everyone has unique strengths and by leaning into those strengths, one has a higher likelihood of being successful. Stepping into a BDO role at Siena has allowed me to put that belief to the test.

Perer: What’s been the most challenging aspect of learning the business development trade?

Anderson: Signing a term sheet and changing lenders is a big decision for a company. While you can deliver everything a company is looking for, it can be difficult to get decision makers to commit. That last 5 percent of the process (getting the term sheet signed and the deposit delivered) is the hardest part and takes practice. There is no right or wrong way to get there, but the only way to learn is through patience and by discovering what works for you individually, while also recognizing that every situation may be different.

Waggoner: When and where to spend time. Especially in the early days, it took a while to recognize who was worthwhile to build relationships with. Even with years of underwriting experience, it was still a challenge to figure out which of my new deals would get approved, so there’s a trial period of sorts that can be deflating until you get into the swing of the market.

Tsitsos: Patience. The work you put in today more often than not won’t generate results for months or years down the road. Prospects aren’t always motivated to move deals along. Deal timelines seem to get longer and longer. I’ve had prospects go with a competitor’s term sheet and come back months later, so patience is key.

Cortes: Working on my golf swing certainly hasn’t been easy. Joking aside, the most challenging aspect of business development has been navigating confidence while being receptive to feedback and collaboration. I find this applicable both with prospects and with approvers. BDOs need to have a level of confidence to gain trust and build rapport, however, there is a fine line between confidence and arrogance. The constant challenge is to ensure that my confidence in the deal and in what I can bring to the table is received, and that it is not perceived as arrogance. This is particularly true as a younger BDO. I always have to ask myself how I can make sure I relay my knowledge in an informative way while not coming across as a “know-it-all.” The goal is to show that I have done my due diligence, but also that I am open to collaboration and feedback. As a younger BDO, the challenge is how to show you know your stuff, but to also be able to ask questions and seek guidance, without appearing inexperienced.

Perer: How will both bank and non-bank ABL evolve over the next decade given the consolidation trends in each?

Anderson: There will always be new entrants to the non-bank ABL space as it is an attractive asset class. What matters is who can stand the test of time. Only those lenders that make prudent new business decisions and appropriately manage the risk/reward will last.

Waggoner: I think bank ABL will continue to move upmarket, and the gap will be filled by non-bank ABL shops who can offer lending solutions of all shapes and sizes. I also see technology playing a bigger role in our industry going forward; while we don’t yet fully understand the potential capabilities and impact of AI, we’re continuing to see software platforms that further integrate systems and improve monitoring/reporting capabilities (both for lenders and borrowers).

Tsitsos: I think we’ll see lenders look to carve out a niche and create loan products for previously underserved ABL markets because being specialized is a great way to stay relevant and in demand. As more capital flows into the private credit market over the next decade and competition to deploy capital increases, bank and non-bank ABL lenders will have to be thoughtful about who they decide to partner with and how it will provide a competitive advantage.

Cortes: Great question, but a tough one. I can’t predict how the industry will evolve, but we are seeing competition for ABL loans as competitive as ever, with both regulated and non-regulated institutions pushing into the space. Although this dynamic may look like a more permanent shift in the marketplace, the industry has seen this dynamic ebb and flow over previous economic cycles. And, while the market is becoming more active and there seems to be an uptick in opportunities to put capital to work, as traditional banks lean in to win business, we could see the dynamic shift back as drawn pricing spreads and loan structures might become more aggressive and it will be harder for non-regulated firms to win, given they traditionally have a higher cost of funds. Ultimately, what I do feel confident about is that ABL will remain an attractive alternative to companies looking for flexibility, ease of execution and competitively priced financing solutions.

Perer:  Can you share any unique perceptions about today’s ABL market versus when you started your career?

Anderson: I started my career in 2015 when money was cheap, and times were good. The cost of borrowing is significantly higher in 2024 and has resulted in businesses making different decisions. Overall, borrowers have been more cautious about how much leverage they take on because the debt service can cripple what would be an otherwise healthy business.

Waggoner: The playbook is different. In today’s market, you can become a lender with nothing more than funding and the desire to do so. Some of the fintech platforms are great examples of the ability to build a $100 million-plus portfolio in a very short period of time – and most of them are doing it without deeply experienced secured lending professionals at the helm. This is not to say that it’s going to work out for everyone, but the barriers to entry are much lower today and private credit has never been more relevant in the capital markets.

Tsitsos: Given the number of new bank and non-bank ABL lenders in the market today versus when I started my career, I think it’s only gotten more competitive and it’s more difficult to stand out. That’s where having and maintaining strong relationships is critical for your deal flow and ultimately your success as a BDO.

Cortes: The main difference I have noticed has transpired over the last 18 months with companies having to come to terms with the cost of capital and accepting debt is not as easy, or cheap, as it has been over the past 15 years.