Acconto Financial Corporation is excited to promote its novel specialty loan offering to small- and medium-sized enterprises. As a new leader in commercial lease deposit financing, Acconto assists tenant-businesses by providing a point solution through the funding of up-front lease deposit and pre-paid rent amounts during the leasing process.
In exchange for lease deposit and pre-paid rent funding, tenants pay Acconto a small administrative fee and term loan repayments of principal and interest over a flexible, tailored amortization period.
Why Acconto?
- Businesses are struggling with operating expenses: Business investment can be daunting for new and existing companies, especially when seeking new or additional rental space for their operations. Lease deposit obligations alone can be tens or even hundreds of thousands of dollars, placing a strain on working capital.
- Commercial lease deposit structures disadvantage businesses: While deposit and pre-paid rent obligations in a commercial lease serve the important purposes of securing a tenant’s lease obligations and incentivizing prompt payment of rent, commercial lease deposits are effectively interest-free loans to the landlord for the term of a given lease which reduce tenant working capital at the same time.
- Alternative credit enhancement products are inaccessible to many SMEs: Whereas large corporates, especially investment-grade companies, can elicit the assistance of financial institutions for letters of credit and financial guarantees to cover commercial lease deposit obligations, SMEs typically do not have the capacity to cash collateralize letters of credit or obtain suitable guarantees.
An efficient process for securing lease deposit financing
Acconto employs a seamless application to funding experience for tenant-businesses. After providing a copy of their offer to lease or lease document, as well as supporting financial due diligence material, Acconto will provide a timely response and proposed terms within days, subject to credit approval. Documentation is minimal and tenants can rest assured they can secure their business home, hassle-free.
Strategic partnerships with industry stakeholders
Acconto welcomes commercial agents to promote Acconto’s offering to their clients. If an agent refers a business that is successful in securing lease deposit financing through Acconto, remuneration is provided through agreed splits of up-front administrative fees charged to the borrower.
Hypothetical case analysis
An example transaction for a 10,000 square foot unit based on a $20 annual grossed-up PSF rental rate would require roughly $56,500 ($50,000 plus HST) in deposit funds (first month’s rent, last month’s rent, and one month security deposit). Based on a hypothetical interest rate of 11.45% (current bank Prime plus 5% risk premium), this amounts to monthly payments of approximately $1,862 based on a 3-year amortization. In addition, Acconto charges up-front origination, administration and servicing fees equal to 2% of loan value (subject to maximum amounts determined by Acconto).
Closing the liquidity gap
Acconto believes that as the cost of doing business increases, providing a point solution for lease deposit financing democratizes the playing field for SMEs. Tenants can put cash that would have been used for pre-paid rent and security deposits to work where it belongs—in their business operations—leaving landlords no worse off than they would have otherwise been.
In addition to its specialty deposit loan product, Acconto is also willing to provide term loans to SMEs for general business purposes on a case-by-case basis. If you or someone you know is interested in learning more about what Acconto can offer, please contact the team by accessing the company website.
Link to offering: acconto.ca
Disclaimer: This information is current as of the writing of this article and is subject to change without notice. All loan terms, economic or otherwise, are determined on a case-by-case basis, subject to credit approval by Acconto in its sole, unreviewable, and arbitrary discretion. No element of the foregoing article is meant to serve as an offer to loan.
