Republic Business Credit Uses Tech to Make People-Oriented Decisions
When it comes to financing mid-market companies, especially in the apparel business, the president of Republic Business Credit knows that service goes well beyond supplying funds, but also to counsel and service.
After all, it wasn’t that long ago that Republic was a start-up itself.
“We’re in Phase 3 of Republic’s history,” says Robert Meyers, president of the New Orleans-based firm. Meyers oversees originations, underwriting, and marketing for the company, which was founded by Allen Frederic Jr. and Stewart Chesters in January 2011 to provide working capital for rapid start-up, expanding, and turnaround companies. A combination of owners’ equity, support of a state pension fund, and an initial Senior Facility from Wells Fargo Capital Finance got the business under way.
“They came together with three employees and no clients, and creatively put the business together,” Meyers explains. “The next four or five years saw Republic going through the traditional stages of business growth: existence, survival, then growth. It was profitable within the first 18 months.”
The second phase of Republic’s growth story accelerated with Meyers teaming up with its then-COO and president, Chesters, and a single-family office to lead a management buyout of Frederic’s interest and that of the remaining shareholders. (Frederic remains vice chairman.) Since then, the team has doubled Republic’s business, now totaling 91 clients in 33 states across North America. In addition to its New Orleans headquarters, RBC boasts offices in Chicago, Houston, and Los Angeles.
Republic offers financing solutions including traditional non-recourse factoring, recourse factoring, ledgered lines of credit, and asset-based lines of credit to companies in a variety of fields, including staffing, food and beverage, manufacturing, transportation, consulting, oil-field service, and distribution. Typically, it works with companies of up to $100 million in sales, what Meyers refers to as “growing middle market.”
It also has a special focus on the apparel and consumer packaged goods industry, offering nonrecourse and traditional factoring facilities. The shifts in this industry are of particular interest to Meyers, who ran another factor’s Los Angeles offices prior to acquiring the company.
“During the 2014 California port strike, we had to help our clients through an incredibly uncertain time. We used a variety of vehicles, including overadvances, purchase order lending, and extending eligibility to help. We were calling retailers to make sure they weren’t going to cancel orders,” he recalls. “We even worked with some brands to explore different shippers to help our clients get their cargo to the stores. It as a phenomenal time to get a crash course in the world of apparel, accessories, and furniture. Our business was literally sitting on the ocean.”
What distinguishes Republic, Meyers says, is its ability to make quick decisions that aren’t strictly by the numbers. Traditional banks are often tied to a pre-fixed toolkit that doesn’t provide room for flexibility. Republic invests in and partners with the people behind the businesses.
“All of our clients are entrepreneurs. I’ve sat across the table from them. We engage with them and learn about them, so our team is empowered to make exceptions when necessary,” he notes. “At a large bank, if a client gets into trouble, there’s a rulebook you typically throw at the client. We take the time to understand them and provide a plan that actually helps them.”
That can include some challenging conversations, such as disposing of excess inventory, or advice to stop selling to retailers that are taking too much advantage. But the travails of big box retail also may lead to growth in other areas, such as independent shops or e-commerce sites. Republic even has advised clients on the best uses of social media to draw interest to its brand. But it’s that kind of involvement that differentiates Republic from traditional lenders.
“When times are good and they’re profitable, they often go to a bank for a lower interest rate. But you often get what you pay for. If we were just providing dollars, we would need to be the low-cost provider. We will never be the cheapest out there. So instead of just putting out a term sheet, we meet the client first. We talk about the customer base, about their supply chains, including which third-party vendors they use,” Meyers says. “We ask about their markdown history to compare with our trends from the different retailers.”
Often, these mid-market companies are using the same CPA firms that helped them launch the business. But their needs likely have grown and become more complex, he continues. To help with these efforts, Republic will offer advice and make referrals to expert accounting firms.
“One of our primary benefits is that we offer our clients advice and consulting. One of the top challenges in apparel is their cash cycle, from the time they receive orders in September to getting receivables paid in March and April,” he notes. “We’ve advised brands not to sacrifice on quality as they introduce various lines or expand their business. And every client needs different advice or different counsel.”
The team introduces clients to legal counsel to ensure that purchase orders are written properly, works with its clients’ accountants, and introduces them to investment banks and equity firms when necessary.
Republic’s use of proprietary technology to allow entrepreneurs and small businesses to apply for its various financing products allows its 32-person staff to focus on being involved more deeply as advisors. Clients can apply for products online at any time of the day or night. The application integrates with the client’s bank account, and with the entry of the username and password, the system can automatically pull all reports Republic needs to make a proposal decision.
“We’ve learned that customers don’t want to deal with old software and systems,” Meyers says. “We’ve included the lessons learned from Fintech and consumer preferences into our business. We don’t have to wait for the customer to send us an email. We’re prompting their systems to send us the reports in very specific ways. It’s really revolutionized how we interact with the customers, particularly younger and smaller business owners, who may not have a full-time CFO or controller. And we’re taking that technology into our operations team, as we ask for inventory reports and more. It will be automatically pulled out of the system. Our clients can get on with their business and not worry about their lender monthly packets.”
Republic also offers assistance with acquisitions. Just don’t expect it to be the target of acquisition itself anytime soon.
“We’re just getting started, and I’m just 34 years old,” Meyers said. Meyers, who also serves as chair of the Commercial Finance Association’s Young Professionals Organization, is president-elect for the Turnaround Management Association’s Midwest Chapter. He is a member of the Executive Committee and a past president of the Midwest Chapter of the CFA. He also was awarded the CFA’s inaugural Top 40 Under 40 Award in 2016, one of two Republic staffers to be so honored: Danika Louis, head of portfolio, was awarded the Top 40 Under 40 award in 2017.
“While we don’t have the same cheap capital that banks might have access to, luckily we have a lot of support,” he said. “But we want to stay independent. We want to stay entrepreneurial-focused.”
Robert Meyers
President
Republic Business Credit
630-788-5100
rmeyers@republicbc.com
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