SVB Collapse: Tech Lender Liquidity Group Steps in To Offer Loans to Affected Startups

As companies continue to seek ways to recover their funds following the collapse of Silicon Valley Bank, reports reveal that tech lender Liquidity group plans to offer about $3 billion in emergency loans to affected startups.

Liquidity Group Chief Executive Officer and Co-Founder Ron Daniel disclosed that the firm already has about $1.2 billion in cash to make available in the following weeks while noting that discussions are ongoing with its funding partners to offer an additional $2 billion in loans.

Daniel disclosed that the sole aim for the disbursement of its proposed loans is to assist affected startups to meet their payroll expenses, noting that he believes the loans that will be provided will try to help them stay afloat with the hope that they would succeed and come back to the company in the future.

In his words, “By helping the companies to survive now, I’m hoping some of them would succeed and come back to us in the future. We are nurturing our future clients. A typical loan will be a one-year facility of $1 million to $10 million, or as much as 30% of the balances held with Silicon Valley Bank. The priority is to help these companies meet payroll expenses”.

Also, private lenders such as Oaktree capital management, Investment Partners, Ares Management Corp., and KkR & Co. have revealed plans to offer backup financing for clients of SVB. Several other lenders are seeking to offer liquidity to private equity and venture capital firms whose portfolio companies are unable to access cash at Silicon Valley Bank at a discounted price of around 80 cents, in exchange for a guarantee from the fund that owns the companies.

Investors King understands that the collapse of the prestigious Silicon Valley Bank has left companies such as Eiger Biopharmaceuticals Inc., Roku Inc., and several other firms unable to access deposits in the bank, while some firms are reportedly in dire need of cash to meet urgent deadlines for business operations.

In the meantime, more than 400 venture capital firms have issued a joint statement in support of Silicon Valley Bank (SVB). General Catalyst and managing director Hemant Taneja via a post on LinkedIn disclosed that several venture capital leaders met to discuss the aftermath of Silicon Valley Bank’s downfall. A dozen of some of the best-known names in venture capital issued a joint statement that expressed support as well as disappointment.

Leading VC firms, through a joint statement stated that SVB has been a trusted and long-time partner in the venture capital industry, noting that they would strongly support and encourage portfolio companies to resume their banking relationship with the bank.