Grapevine, Texas — Banks have money and they are ready to lend to plastics recyclers, according to one financial executive.
"The environment has improved pretty dramatically," said Mike Davenport, a managing director at Huntington Bank, at the Plastics Recycling Conference in Grapevine. "There's capital there for you."
Davenport, speaking as part of a presentation on capital investment options for plastic recycling operators, told attendees 2024 is shaping up to be a much better market for companies looking for financing compared with 2023.
"I think the banks are looking to lend," he said.
But banks these days want to create a relationship with their customers, not just lend them money, Davenport said. That means cultivating deeper relationships with clients.
"When banks are looking to work with companies, their focus is on stability and cash flows. How they are going to get repaid? How they are going to get their money back in the doo? And also the overall relationship return of those relationships," he said. "From my perspective over the last 12 months or so, I think banks are heavily focused on making sure that they are going into the right relationships where it's a good two-way relationship," Davenport said.
"They want a full relationship with their clients, and they want to be helping you with really important needs that you probably have that aren't credit related. I think that's a really big piece of what we're seeing in the market today," he said.
Panelists, meanwhile, also talked about the weight of environmental, social and governance efforts being made by companies in today's lending environment.
Plastics recycling companies — just by their nature — can have strong environmental and social stories to tell the market. And while ESG has been a growing focus in finance in recent years, panelists said the topic still plays second fiddle to underlying financial strength of any company seeking capital.
"I think banks are always happy to be working with companies who are doing good things. I'm not certain they are going to make an economic decision off that," Davenport said.
Having a good story to tell when it comes to ESG can help give a company looking for funding some "bonus points," Huntington Bank economist Ian Wyatt said. "But the obvious thing is your balance sheet," he told the crowd.
"I think ESG is probably not as heavily a focus today as it was 12 to 18 months ago," Davenport said.
"I think we're in a good spot. Companies that are thinking about raising capital over the next six to 12 months, I think there is capital there for you," he said.