By Peter VanPutte, Managing Director, Commercial Capital Partners, The Bonadio Group.
With traditional banks tightening underwriting standards and interest rates remaining volatile, many middle-market companies are discovering how they access capital matters as much as whether they can access it at all.
For CPAs and advisors, this shift presents both a challenge and an opportunity. Clients are navigating a fundamentally different lending environment than they were just a few years ago. The assumptions that once guided capital decisions: predictable underwriting, leverage-based approvals, and long-standing banking relationships, are no longer sufficient.
Understanding what’s happening behind the scenes in today’s lending market is critical for advisors who want to proactively guide clients rather than react to financing roadblocks.
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The Banking Retrenchment and the Rise of Private Credit
Traditional banks continue to face increased regulatory scrutiny, capital reserve requirements, and portfolio concentration concerns. The result? More conservative underwriting, reduced loan sizes, tighter covenants, and longer approval timelines.
In response, private credit has expanded rapidly to fill the gap.
Importantly, private credit is no longer a “lender of last resort.” For many middle-market companies, particularly those in transition, growth mode, acquisition cycles, or ownership restructuring, private lenders often offer more flexible structures aligned with business realities.
Private credit providers can:
- Structure around cash flow volatility
- Offer customized covenant packages
- Move faster through diligence and closing
- Support more complex capital stacks
For CPAs advising clients, the takeaway is clear: financing conversations should now include private credit as a strategic option, not just a fallback solution.
Underwriting Has Changed: Cash Flow and Collateral Rule the Day
One of the most significant shifts in today’s market is what lenders prioritize.
Historically, leverage ratios were central to underwriting decisions. Today, lenders are increasingly focused on:
- Free cash flow coverage. Can the business generate consistent, recurring cash flow to service debt comfortably, even under stress scenarios?
- Collateral liquidity. How quickly and reliably can assets be converted to cash if necessary? Inventory quality, receivables aging, and real estate valuations are being scrutinized more closely.
- Quality of earnings and predictability. Adjustments, add-backs, and one-time events are receiving heightened diligence. Lenders want clarity and defensibility.
This shift places CPAs at the center of the lending conversation. Financial reporting quality, normalization analysis, and forward-looking forecasting are no longer peripheral. They directly impact capital access and cost.
Capital Structure Is a Strategic Lever
Too often, capital structure decisions are treated as transactional. In reality, they influence:
- Cash flow flexibility
- Liquidity reserves
- Growth capacity
- Acquisition timing
- Shareholder distributions
- Long-term enterprise value
An overly aggressive debt structure can constrain growth and strain working capital. An overly conservative structure can dilute returns or stall expansion.
In today’s environment, optimizing capital structure requires modeling multiple scenarios: interest rate sensitivity, covenant headroom, liquidity thresholds, and downside cases. Advisors who help clients think in terms of resilience, not just approval, add measurable value.
What Clients Should Do Before Approaching Lenders
Preparation has become a competitive advantage.
Companies that enter the lending process organized and strategically positioned tend to negotiate better terms and shorten diligence timelines. CPAs can help clients by ensuring they:
- Strengthen financial visibility. Clean financial statements, defensible add-backs, and well-supported forecasts reduce friction and build credibility.
- Stress-test projections. Lenders are running downside scenarios. Clients should do the same before entering discussions.
- Evaluate working capital efficiency. Receivables management, inventory turnover, and payables discipline directly influence liquidity analysis.
- Clarify capital purpose. Growth, refinancing, acquisition, recapitalization…each objective demands a different structure. A clear narrative improves lender alignment.
- Assess lender fit, not just pricing. Speed, flexibility, industry experience, and appetite for complexity often matter as much as rate.
The businesses that approach capital strategically are often able to negotiate from strength rather than necessity.
The Advisor’s Expanding Role
As capital markets evolve, CPAs are increasingly called upon to serve as strategic translators, helping clients understand both financial readiness and lender expectations.
By staying informed about lending trends and alternative capital sources, advisors can:
- Anticipate financing constraints before they arise
- Guide clients toward appropriate capital partners
- Improve underwriting outcomes through financial clarity
- Support sustainable, value-focused growth
In a tighter, more nuanced lending environment, access to capital is no longer just about relationships or ratios. It’s about preparation, structure, and strategy. For firms that embrace this advisory role, the shift in lending markets isn’t a headwind; it’s an opportunity to deepen client impact.
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Pete is the Managing Director of TBG Commercial Capital Partners (CCP). Commercial Capital Partners, a TBG affiliate dedicated to meeting the financial needs of developers, property owners, business owners, and entrepreneurs, offers an innovative business lending marketplace. This online portal connects business owners and entrepreneurs with hundreds of lenders to secure the best loan terms tailored to their needs. From business term loans to SBA loans, our marketplace offers a comprehensive range of financing options. Pete began his career at M&T Bank in Rochester, N.Y., and moved to ESL Federal Credit Union as the Director of Business Banking. He’s been with The Bonadio Group since 2014.
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