American author and political activist, Helen Keller, once said, “Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.” It’s amazing what human beings can accomplish when failure is not an option!
Eric Inspektor, Founder and senior underwriter of CORfinancial (COR) has spent over three decades advising on and structuring non-conforming or asset-based loans. His prime focus is on ensuring that viable companies flourish. At COR, Eric is responsible for deal origination, due diligence, restructuring solutions and liaison between borrower and lender.
In 1988, Eric founded his first merchant bank, where for over 24 years, he restructured/refinanced a number of high-profile Canadian and American companies (deals totaled $500+ million – all of these companies were either successfully sold as going concerns or went on to flourish), building a successful non-prime automotive leasing company, and establishing a unique financial structure to help developers survive through the 1990 real estate collapse.
Prior to emigrating to Canada, Eric operated and expanded his family’s wholesale/retail liquor business in South Africa and successfully turned one liquor store into a chain of liquor stores. When he emigrated to Canada in 1985, the family’s South African chain was the only importer/distributor of kosher alcoholic beverages in the country. When he first arrived in Canada, Eric decided to build upon past business successes, and purchased a Canadian retail franchise. Within short order he successfully turned that one successful franchise into three successful franchises.
Background & Experience
Eric is the quintessential Comeback Entrepreneur. In the late eighties Eric’s main focus was on real estate financing. When the real estate market crashed in 1990 it was close to impossible to fund anything.
“Times were tough. I found myself with 8-12 files and not a single lender that was willing to step up to the plate. My lending contacts were even calling me for refinancing options. It was a blood bath.” Eric turned this problem into an opportunity by recruiting a U.S. and a U.K. bank as partners to help sound companies weather the storm and to fill the vacuum.
In 2005, Eric purchased a small automotive leasing company with 250 vehicles and $1.8M in lease receivable value that had run out of capital. Over five years he grew the portfolio to over 3,000 vehicles and a lease receivable value of over $30 million.
Eric attributes his success to his ability to see a deal for what it is and to cut to the chase --- because he understands what the business owner and the lender both want and need. Today, the Comeback Entrepreneur is the founder and senior underwriter at Toronto’s CORfinancial.
COR focuses on creative funding solutions for operating companies and real estate developers. The company name was inspired by what the company does - drilling down to the core of what’s needed to operate the business successfully.
If you own a large multinational company there are many different financing sources. Unfortunately, the same access isn’t available to small and medium-sized business owners and if there is a financial setback it tends to be terminal.
Recently, Eric had a client that had been in a family-owned automotive parts manufacturing business for over two decades. The company had a track record of success and ongoing contracts with Magna, GM, and Chrysler. All of their receivables were insured. The owners had a good credit history, were responsible, committed, and managed their expenses.
Then, the company received a contract to produce just over one million additional parts. Some retooling was required to fulfill the order but the company’s bank would not advance the required capital. One of COR’s competitors introduced the company to an asset-based lender to provide the required funding.
This lender insisted the company discharge the existing conventional mortgage, which bore interest at an attractive USMA rate, and replace it with a new consolidated mortgage that bore interest at a much higher rate. This triggered an affordability problem which resulted in the bank moving their account to special loans.
Although COR has a solution, the existing lender is insisting on two years prepaid interest as an early repayment penalty. “In my opinion, this lender made the loan knowing that this could result in the company going into receivership. This is pure predatory lending that I want no part of. I’m not interested in putting together a deal that will help the client into an early financial grave.”
A different COR client had a property portfolio consisting of six commercial buildings. One tenant occupied 137,000 square feet and wanted to terminate the lease. The owners were happy to do so as market rents were significantly higher. Unfortunately, by agreeing to break the lease, the owners inadvertently triggered a default of the terms of the existing $25M first mortgage.
Moreover, more money was needed for leasehold improvements to attract higher paying tenants. COR was able to leverage the excess equity and secure an asset-based loan for the client where security registered did not further exacerbate the covenant breach. This funding allowed the client to sign leases with Ford Motors U.S. and Google.
Eric has seen substantial changes in the way traditional banks operate. “When I first started out in 1988 branch managers had real lending responsibilities - they had their own lending limits, could authorize loans in-house and were required to manage both the client and the loan.
Unfortunately, following the real estate collapse in 1990, the banks moved all credit adjudication “downtown” to a faceless backroom adjudication process. They also moved away from traditional lending where the five “C’s” - character, capacity, credit, capital, collateral - and relationship were the fundamentals to sound lending.
If you are a businessperson seeking financing, the retail bank isn’t your only financing option. “If I had advice to give it would be don’t be shy to ask questions and thoroughly vet potential lenders. Your solution may be an asset-based lender and you may have to pay fees; pay a little bit of money now rather than a lot of money later.”
“I know because I’ve made the same mistakes – when we were putting our financing together in 2011 to continue to grow our automotive leasing company, I should have asked more questions and done more research. I didn’t and paid the price. If it’s OK for billion-dollar companies to hire intermediary assistance and pay substantial fees for their advice, business people like us should not be too proud to do so.”
Typically, bankers interview the borrower to determine if he or she is a good credit risk. Eric believes borrowers should be prepared to interview potential lenders to determine fit and to assess if the lender truly understands what they are trying to accomplish.
Although bankers/lenders understand banking and the economy, they are focused on over-securing funding and do not necessarily understand a borrower’s specific business, products or customers which often leads to not offering what is requested. “You know your goal and what you need, and it is never a good strategy to accept less or different financing than what is actually required.”
Up Close & Personal
Eric studied accounting at the University of Witwatersrand. He interned at an accounting firm in Johannesburg for two years and completed a year of military service in the South African Air Force before joining the family liquor business. He emigrated to Canada in 2005.
Outside of work, Eric enjoys spending time with his kids and grandkids, and taking long walks with his wife and dog. He is currently writing a book on Enterprise Value – uncovering the truth behind the entrepreneur’s struggle to grow.
He believes in giving back to others and over the years, raised money for the Jewish National Fund, where he chaired the “Restorer of Jerusalem” project and he and his family funded the building of a playground for handicapped children in Israel. He also organized a golf tournament called “Friends of Starlight,” which raised over $150,000 for the Starlight Children’s Foundation over a three-year period.”
As a last word, Eric says “At the end of the day, the only thing I really bring to the table is the benefit of my grey hair, battle scars, and experience. I will never do a deal just for the sake of just doing a deal. I’m only interested in doing the right deal, one that helps the borrower and protects the lender. In the words of the late, great Martin Luther King, Jr., “The measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” There is no need to stand alone. Financial problems don’t have to be fatal. I would love the opportunity to work with you as together we write YOUR Comeback Story.”
Suzen Fromstein is the author of Suits and Ladders, Ten Proven Ways to Keep Your Job Safe - with a few jokes thrown in. Suits and Ladders was an Amazon Best Selling Book in the Career Guides Career Guides Category
77 Ingram Dr Suite 201,
North York, ON M6M 2L7
ERIC INSPEKTOR, FOUNDER & COO,