Enhanced Capital President and CEO Michael Korengold was recently featured on a Bloomberg TV Triple Take segment focused on cracks in the credit market. Triple Take segments provide three angles on a single topic in order to provide investors and viewers with a balanced and complete perspective on the world.
In this segment, Sonali Basak, Taylor Riggs, and Katie Greifeld looked at several sides of the credit market: signs of stress, corporate America, and banking deserts.
Speaking from the perspective of an impact lender for the U.S. small business sector, Michael noted the dearth of capital for small businesses and discussed the resilience of and outlook for small businesses given challenging economic market conditions.
“Add on the impact layer and picture a business located in rural America or a low-income community or a business perhaps run by a woman or person of color. They have an even harder time accessing the capital markets.”
He pointed out that there are a number of sources for borrowers in the $10 million or $20+ million range and that online lenders support borrowers in the $25,000 or $50,000 range, but that there is a “capital gap” for borrowers needing $1 million to $5 million.
He also noted that while no business is impervious to a downturn, many small businesses have been thriving post-pandemic and that the firm’s portfolio continues to grow, as it works with companies navigating a potential recession.
When asked about federal reserve hikes affecting the credit market and how Enhanced Capliat is structuring its deals in light of a potential recession, Michael noted that a slowdown in M&A has changed how the firm approaches its investments and that Enhanced Capital is now looking at longer duration deals, with more floating interest rates, and other flexibility to account for shifting market conditions.
Visit Bloomberg to watch the full segment. Michael’s interview starts at 13:02.