Great Elm Capital Acquires Majority Equity Interest in Lenders Funding for $7.25MM

Great Elm Capital, a business development company, acquired a majority equity interest in Lenders Funding, a private funding and risk sharing source for factors and asset-based lenders.

Established in 2000, Lenders Funding purchases participations in factoring and asset-based lending transactions and provides working capital to customers under a variety of lending programs.

Great Elm Capital purchased the majority ownership position in Lenders Funding for $7.25 million, consisting of $4 million in cash and $3.25 million in Great Elm Capital shares issued at the company’s net asset value (NAV) as of June 30, 2021. In connection with the transaction, Great Elm Capital will also issue to Lenders Funding $10 million of additional Great Elm Capital shares at June 30 NAV in exchange for a subordinated note in an equal principal amount. The proceeds from the transaction will be retained by Lenders Funding to help support the growth of the business. 

Robert A. Zadek, founder and CEO of Lenders Funding, will continue to own the remaining equity in Lenders Funding and manage the business along with Harvey Friedman and Jean Madden. Zadek has been active in commercial finance and factoring for 50 years as an attorney, lecturer and lender. He was instrumental in the formation of the International Factoring Association and was an instructor for the Commercial Finance Association, now the Secured Finance Network.

“We are pleased to announce the acquisition of a majority interest in Lenders Funding as we continue to weight our portfolio more heavily toward specialty finance,” Peter A. Reed, CEO of Great Elm Capital, said. “Lenders Funding has an excellent long-term track record of profitably growing its business while maintaining a very strong underwriting culture. We are excited to partner with Bob, a well-known and highly regarded decision maker in asset-based lending. This transaction gives us additional access to proprietary overflow opportunities as well as visibility into the specialty finance market through the relationships with the many businesses to which Lenders Funding provides capital.  We look forward to supporting Lenders Funding’s growth and expanding our partnership over time.”

“Throughout our history, we have specialized in providing creative lending solutions to factors and other asset-based lenders,” Zadek said. “We are delighted to have a partner in Great Elm that can help enhance the earnings generated by our lending model in addition to understanding both our credit and corporate culture.”