Low interest rates, strong economic growth, strong balance sheets, and a lack of commitment from large banks will keep the market strong for asset-backed lending for small and medium-sized businesses in 2015, says Old Hill Partners Inc., in its 2015 Outlook.

Far more important than a modest hike in interest rates is the impact of unprecedented and costly regulatory compliance on issuers, because this has forced traditional lenders out of asset-backed lending to small and medium-sized companies, the commentary notes. The result is a lending environment made rich with opportunities.

“For investors, the hunt for yield will continue in 2015,” said John Howe, CEO of Old Hill Partners. “On the corporate side, balance sheets are as strong as they have been in a decade. But companies are now catching up on years of neglected capital expenditures, especially regarding new hires, technical infrastructure and plant & equipment. They are also interested in exploring expansion plans, mergers and acquisitions, and the refinancing of expensive debt taken on prior to or during the financial crisis. All of these things have increased demand for credit.”

Howe also notes that the underlying economy is unlikely to be immediately affected by a rate hike, since it generally takes 12-18 months before changes in interest rates become visible in the real world. Even a 100 basis-point move in the Federal Funds rate would have little, if any, immediate impact on the credit demands of small-to medium-sized businesses.

Old Hill Partners Inc., headquartered in Darien, Connecticut, is an SEC-registered investment adviser with significant experience in all facets of asset-backed lending and alternative investment management. The firm offers customized lending products and services to small and middle-market clients and works closely with borrowers and partners to provide creative funding structures to support near- to mid-term growth initiatives. Founded by John C. Howe in 1996, Old Hill has funded approximately $600 million in asset-backed lending transactions, and has approximately $670 million in assets.