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Welcome to Portfolio Perspective: Managing Risk & Seizing Opportunity, a podcast focused on the asset-based lending industry. Join Andrew Pace, Chief Client Experience Officer at Asset Compliant Solutions, as he interviews experts, shares insights, and explores strategies for managing risk, optimizing portfolio performance, and seizing opportunities in an ever-evolving financial landscape. From regulatory changes to technological advances, each episode provides actionable takeaways and deep dives into industry trends. Whether you’re a lender, servicer, or recovery expert, this podcast offers valuable perspectives to enhance your approach and improve outcomes.
We've built our reputation on saying yes to the right deals, not every deal. Our partners trust that when we commit, it's because we've done the work and believe in the long term performance of the borrower.
Andrew:Welcome back to ACS Portfolio Perspective. I'm your host, Andrew Pace, or as Hollis would say, Pace, chief client experience officer at ACS, joined today by Hollis Buffard, chief executive officer and managing member of Starhill Financial. Hollis founded Starhill in 2016 as a women business enterprise, creating innovation partnership models that help customers meet diversity, spend requirements while delivering practical financial solutions. Under Hollis' leadership, Starhill has developed into a diversified lender with strengths in both equipment and franchise financing, a strategic expansion that demonstrates her ability to identify and capitalize on market opportunities. Before founding Starhill, Hollis served as Chief Administrative Officer of GSG Financial from 2005 to 2017, where she was instrumental in building organizational culture, and was part of the leadership team that successfully sold GSG to OnPoint Group, now NextGen, in 2016.
Andrew:Hollis is deeply committed to the equipment finance industry. She serves on the ELFA's board of directors, and will chair LeasePack in 2026. She's also an active member of NIFA and serves on the Advisory Council for Equipment Finance Cares. Hollis holds a bachelor's degree from the University of Connecticut School of Business. Alice, welcome to the show.
Hollis:Thank you. Good to see you.
Andrew:It's great seeing you too, and it's great to have you on. I think a perfect place to start is with that idea of adaptability, something that's been a defining theme for you and for so many in our industry over the past few years. During COVID-nineteen, you made a major pivot from traditional equipment finance to franchise financing. What led to that decision, and how did identify that opportunity while others were pulling back?
Hollis:Our franchise into franchise was pretty much an opportunity surrounded by timing. Keith Smith, co owner of Star Hill and my partner here, had prior experience in franchise financing. He joined when he joined the company, we had a long term plan of doing franchise eventually, but it was probably more down the path of, like, 2324. With COVID nineteen, there was so much uncertainty. Then you ran into supply chain issues, and then there was a slowdown in equipment originations.
Hollis:So Keith had observed that, you know, quick service restaurants, well, a QSR, were thriving mainly because, you know, drive thrus weren't disrupted necessarily by COVID. Everyone kinda switched to a, you know, curbside pickup. And the model of a quick service was really aligning with, you know, customer behavior during consumer behavior during that time. So we made the strategic decision to kind of, you know, advance our timeline of when we were gonna get into franchise financing and started it in 2021.
Andrew:So for independent lenders without the scale of big banks, what are some of the practical ways to recognize an app on emerging opportunities during those times of disruption?
Hollis:We like to say here that where there's chaos, there's opportunity. And you really get that benefit as an independent because we have the ability to pivot either into other asset classes, add different types of financing products while being aware of the market shifts with interest rates, regulatory, bank pullbacks. You know, one of the independence reasons for success is we're able to move faster, be more flexible than other, you know, financial institutions that are out there.
Andrew:And when you think about diversification versus concentration, what frameworks or guiding principles have helped you make allocation decisions across your portfolio?
Hollis:We evaluate multiple dimensions. We look at industry vertical, asset type, and we're very credit driven. We rely heavily on our the team at Star Hills Experience to evaluate the risk. You know, we like to say we're asset agnostic as long as the asset makes sense for our business model.
Andrew:As someone personally guaranteed during the twenty two, twenty three banking crisis, what did that experience teach you about resilience leadership and managing through that uncertainty?
Hollis:Yeah. That was a good one that came along. You know? We realized, you know, relying too heavily on a single banking partner, even one that you have a long solid history with, was not necessarily the best model for us. So we took a step back during that time, focused on growing relationships with other funding sources, including banks, funding partners, and even some private capital channels.
Hollis:Our goal during that time was to try to be business as usual even though we kinda stepped back more and more conservative in the deals we wanted to do on our line. And then we also had a look at, you know, by personally guaranteeing the lines, it forces us you know, we have a personal risk in the company, not just, oh, it's the company, you know, whatever. You know, Keith and I are putting our names on everything. And it forces us to really collaborate and be better partners.
Andrew:So that strategic agility clearly shaped how you built and scaled Star Hill. Let's shift gears and talk about your approach to building an independent finance company and what's made your model stand out. So you built your team around seasoned veterans, as you mentioned earlier, rather than developing from entry level. What led to that decision and how has it impacted your growth?
Hollis:We're small independent, so recognizing relationships, credit discipline, and deal structure, having that knowledge can make or break a transactions, and experience is our competitive edge. Our team members bring decades of expertise across, again, credit documentation, sales. And, you know, by being a small team with an experienced or seasoned group, we're able to move quickly, anticipate challenges, and come up with solutions that are, you know, pretty good for our customers where a less experienced team would probably miss.
Andrew:And you you you mentioned Keith earlier. Tell us about your partnership with him. How do your complementary strengths play off one another, and how has that partnership evolved over time?
Hollis:You know, anytime you do a partnership, there's always the risk of it not working. We've been very fortunate that the partnership has really been a cornerstone of our success. My background was heavily in operations, I IT, HR, software, documentation, process and systems, where Keith experiences lied more in business development, the banking relationships, credit, and, of course, his experience in franchise financing. So our partnership, you know, really allowed us to kinda focus on where we we had our own expertise and not necessarily be overlapping in how we wanted to accomplish success here. And it does help too that we have very much have mutual respect.
Hollis:We share values. And we're you know, which also leads us to, you know, the ability to challenge each other cause we see it from different perspectives. Again, Ivan Opshead, he is more credit banking. So it's interesting, but it works.
Andrew:That's awesome. There's always a balance, right, between staying small and nimble versus scaling aggressively. How have you approached that trade off?
Hollis:Maintaining a lean team allows us to move quickly, make decisions real time, stay close to our customers. We don't have layers of bureaucracy slowing us down. Our customers who get, you know, to the top leadership and even company owners when needed without having to go through a process of, oh, I need a manager. I need this. I need that.
Hollis:You know? Even to this day, I think I answer all incoming calls that come into Star Hill once they, you know, bypass select your extension. Because if there's an issue, I wanna know about it as an owner. And, you know, Keith wants to know too, so we let it you know, in a sense, I become the operator. Someone really needs to reach us.
Hollis:You know? But the flip side of being nimble is resource constraint. We can't do everything at once. Scaling originations and sales, compliance technology simultaneously takes careful organization. We have to be very disciplined about where we deploy our time, capital, and priorities.
Hollis:Larger institutions can absorb this by you know, they have teams. They may have, you know, hundreds of employees or triple the amount that Star Hill has. And then we also can run into capacity risk. When business surges, again, a very good problem to have, but it can put a strain on our infrastructure personnel. During those times, you know, maintaining a work life balance can be a challenge.
Hollis:But again, we all look at, you know, the reward of getting more deals done. And, you know, so at the end of the day and we know it's temporary. You know? The business does this anyway.
Andrew:Right. Right. So your women owned business enterprise certification opened important doors early on. How has it continued to create opportunity and provide strategic value as you and Keith continue to grow?
Hollis:Yeah. The inception of Star Hill was really realizing there was a need for a minority lessor that wanted to partner with organizations versus trying to sneak away their business. A lot of large companies, Fortune 500, Fortune 1,000, have mandates that they have to do minority spend. So in financing, and as a minority lessor, checks that box for them. So, you know, that's kind of was our pivot move for you know, we could do the deal.
Hollis:And because we're WBE, they get their credits, whether it's mandated. Some cases, there's even tax credits, not so much on the federal level, but in some states, they have, you know, tax benefits. People should reach out to their accountants to inquire more about that because, you know, we cannot give accounting advice. Right. And then, you know, that's really where it comes into, you know, just being a partner to other people.
Andrew:So that foundation and focus on relationships really connect to your credit philosophy. Let's dive into how you think about credit discipline and risk management across such a wide variety of asset classes. So you've described your approach as asset agnostic earlier, credit conscious. What does that mean in practice, and how does it shape your underwriting?
Hollis:We know when we do the underwriting, it really looks at the borrower quality ahead of any single you know, type of equipment or, you know, vertical in the franchise space. We don't specialize in one class. We're not stuck in just transportation, medical, or construction. We start by understanding the customer's business model, cash flow, repayment ability, and then look at the asset.
Andrew:So you financed everything from donut franchises to crematoriums to MRI machines. Yeah. How do you evaluate risk across such a dramatically different types of borrowers?
Hollis:Again, because we look at the credit first and we're not bound by this specific asset class or a captive framework, we can customize tailored solutions probably a little bit better than most. Whether they need an FMV, you know, an EFA, a track, or even something similar to a traditional loan model, we're able to do that, you know, as we know their what their goals are and their credit profile looks like.
Andrew:So with so much diversity in your portfolio, how do you manage concentration risk while still keeping an eye on growth opportunities?
Hollis:You know, again, it really goes back to what the borrower looks like. You know, obviously, in a franchise space, it's very easier to look at the model. You know? We're not gonna do, you know, ABC doughnuts. We're gonna stick with a brand name that's probably out there nationally.
Hollis:And I think that really helps to drive, you know, us, you know, being diversified. Because then again too, the flip side to that is, you know, we do get the deals where it's just traditional equipment finance as well. So, really, by being asset agnostic, it's opened up a lot of opportunities for us and the different kinds of people we could have as customers.
Andrew:So your ability to spot and evaluate those kind of opportunities really depends on reading customer trends. Let's look at how some of those trends are shaping where you're focused heading into 2026. So you focused heavily on tier one quick service restaurants while steering clear of casual dining. What drove that decision?
Hollis:You know, that really came down to, you know, what quick service in the tier one space. Again, we're talking national brands that everyone's pretty much heard of. They pretty much operate in high transaction volume. They have stable margins and steady cash flows even when the economy takes a downturn. A lot of the you know, there's a lot of brand loyalty out there from a consumer standpoint.
Hollis:And, you know, again, from COVID, fast food really kinda had a resilience that still tends to drive performance today. So that's really, you know, kinda how we look at it from that point.
Andrew:And how how do shifts in consumer behavior like demand for healthier options or the drive through convenience inform your lending strategy?
Hollis:You know, I think that's out there. I think these franchises realize, you know, in today's age, people wanna eat a little bit healthier. So you see the different types of meal. But, again, you also have the, you know, a lot of quick service. You know, a lot of families are busier now.
Hollis:They're gonna stay away from casual sit down restaurants. And, like, they're on the go, whether, you know, that's multiple sports or dance or all the activities that kids have today. The, you know, quick serve really does allow them to either eat quickly or eat on the go. And I think we've also looked at looking at that.
Andrew:I mean, it also reduces overhead too. Right? I mean, you don't have to you don't have all that extra space. You don't have It's
Hollis:less labor intensive. You don't have the space heaviness. And, you know, again, even though, you know, you hear about, you know, what fast food prices could be going up as well, we're seeing that across the board anyway. Even these, you know, small casual dining places are going up even more because they have a larger overhead. What also helps us kinda decide where we can pivot into is because they're backed, you know, are backed by the actual franchisor, you know, they get the marketing.
Hollis:You know? It's not like they have to put out their own marketing. Maybe locally they will. But from a national standpoint, you know, they have that support from the franchise. And even some of them will even send in a fixer should a store be underperforming.
Hollis:And the amount of data they collect when you're looking at an opportunity and you're looking at the financials, you can see the full spread and how it compares to other stores, whether it's regionally, you know, across the Continental US to really help us make good credit decisions.
Andrew:Is there a lot of market research that goes into putting some of these stores or these quick service restaurants strategically in certain locations based on population and traffic and things like that?
Hollis:I mean, yes, you do see some regional things. But, again, they're also very good, like, national brands. You know, something that's very popular in the South, we may not see in the Northwest where a different, you know, type of hamburger joint may perform better to Portland than it does in Florida. You know, just really trying to spread it out. But the research and that is put out, like, literally, there's, like, volumes of information to kind of go look at comparison whether and, again, it breaks it down regionally by brand so you can really make sure the store before you or their past even if they're opening a new store, their past other stores have succeeded and we know where they're going.
Hollis:Again, you're not gonna continue like, oh, well, I wasn't a good burger franchise, so now I'm gonna just try pizza. You know, at the end of the day, these are entrepreneurial owners, and they're either gonna make it or not. Sometimes switching the brand isn't, you know, the right move if they're not a good operator.
Andrew:So let's talk about inflation and cost pressures that can affect different segments in different ways. How are you positioning your portfolio to navigate those challenges?
Hollis:Again, being asset agnostic allows us to balance exposure pretty well. And, you know, we strategically leaned into the tier one for their stability. And then, again, the equipment deals that we do, again, we're using, you know, credit to drive our decisions and how we're dealing with, you know, inflation and economic pressures that are out there. The economy is always gonna be shifting. So, again, you just have to look at where best to pivot and focus your energies and underwriting on to make sure we can stay successful.
Andrew:In looking ahead, how do you balance being opportunistic with maintaining the conservative credit discipline that's become a hallmark of your brand?
Hollis:We've built our reputation on saying yes to the right deals, every deal. That's kind of been an important, you know, tactic for us to follow. Our partners trust that when we commit, it's because we've done the work and believe in the long term performance of the borrower as long and, like, their assets, so to speak, and what they're gonna do. We'll continue to pursue opportunities that fit our credit philosophy and assets that make good economic sense for us. Going into 2026, we're probably gonna, again, look at our, you know, proven borrowers, focus on the deepening relationships with, you know, trusted partners in both franchise and in the equipment finance space.
Hollis:You know? But that being said, we should always expect the unexpected. Even though we have a playbook and a good plan going into '26, we have to be prepared to pivot for market changes. Because as we know in this industry, eventually, history will start to repeat itself in an economic trend.
Andrew:That's great perspective, Hollis. Before we wrap up, what is one piece of advice you'd give other independent lenders trying to stay both resilient and opportunistic in this environment?
Hollis:You know, it really goes back to, again, your your ability to pivot. You have to be willing to look at different assets. I mean, let's look at trucking right now. Nobody really wants to touch trucking right now. But if you're a trucking equipment finance person, you've gotta make a move into something else in order to stay successful.
Hollis:And then, again, you know, look at your expertise who you have. You know? Do we need to diversify more? If we only do, you know, FMV leases or dollar out leases, should we be offering something else to people? Having, like, almost like, I guess, a variety of product offerings and, again, being able to pivot is probably what's most crucial to the success of an independent.
Andrew:Alice, that's terrific insight. I really appreciate the perspective you shared today from the strategic pivots that defined Starhill's growth to your disciplined approach to credit and marketing positioning. It's clear that your success has been built on a mix of agility, experience, and the ability to read the market before others do. For our listeners, I encourage you to follow Star Hill Equipment Finance, and connect with Hollis to keep up with their latest initiatives and thought leadership. There's a lot to learn from how her team has navigated some of the most unpredictable cycles in our industry.
Andrew:Hollis, thank you again for joining me on ACS Portfolio Perspective. It's been a pleasure having you on the show. And to our audience, thank you for listening. Be sure to subscribe and catch future episodes as we continue exploring the people, partnerships, and perspectives shaping the equipment finance landscape. Until next time, I'm Andrew Pace.
Andrew:Thanks for tuning in.