“What if we’re wrong? We’ll make up the difference.”
That is how Thomas Galbraith describes his approach to collateral valuation, and in today’s lending environment, that level of confidence stands out. On The Credit Union Connection, Sarah Snell Cooke sits down with Thomas, co-founder of Barker, to talk about a corner of business lending that is growing quickly while many institutions are still figuring out their next move.
Banks have pulled back from certain types of business lending. Private credit has stepped in. Asset-backed lending is now a trillion to two-trillion-dollar sector expanding at double-digit rates. Credit unions are in the middle of it, with trusted relationships and member loyalty already in place. The real question is how they compete while managing risk and higher capital costs.
What makes this conversation worth your time is discussion around the practical tension between borrower expectations and lender caution. Businesses want to unlock more capital from their equipment, vehicles or other hard assets. Lenders worry about valuation accuracy and downside risk. Traditional appraisals can take weeks, letting opportunities slip through lenders’ fingers.
Thomas explains how Barker built its own large language model trained specifically on valuation data and then backs those valuations with insurance. If the collateral sells for less than projected, a claim is paid. That combination of AI-driven pricing and risk transfer has implications for loan-to-value ratios, speed to funding, and overall portfolio performance.
Sarah brings the discussion back to members’ trust in their credit union. In a competitive market filled with newer private lenders, trust matters. Where can credit unions grow responsibly? How can they serve business members who need more capital right now?
If business lending and risk management are on your radar, watch the video to listen to Thomas’ own words.
NOTE: The AI-generator that created this transcript should not quit its day job.
Sarah Cooke
Hello and welcome everyone to the crane connection. I am Sarah Snell Cook, of course, your host here. I am joined today by Thomas Galbraith. Welcome, hello. Thank you for having me. Thank you for being here. He is the co founder of a company called Barker. Why don’t you give us a little introduction to yourself, as well as the company.
Thomas Galbraith
Yeah, sure. Thank you. I have been in the sort of luxury and tech arena for about 20 years, having previously lived in New York for about 15 years. I moved down to Miami about five years ago, and Barker we started about three years ago to solve a very specific problem within lending. So we value loan collateral with our proprietary AI, and then we underwrite the accuracy of that valuation, and in the event there’s a default and the assets, the collateral, sell for less than we said they were worth. Then we pay a claim in partnership with our insurers, Munich, agree and others. And that’s really, it seems very simple, but it’s a very, very big problem that has existed for a long time, and we were able to come along and solve it.
Sarah Cooke
Yeah, so if you could talk a little bit about the business lending environment in the US right now, how’s that going?
Thomas Galbraith
I don’t say this to be self-serving, but it’s actually really interesting. And it’s interesting for a few reasons. The biggest really, is this broader shift that’s taking place. There’s a shift from banks doing lending to businesses for eons and eons, and then as regulatory requirements have changed, and whether it’s Basel three or other regulatory concerns coming in, we’ve really seen the shift where the banks are actually pulling back from lending to businesses as much as they used to, and that gap has created an opportunity for private credit to come in. So private credit has actually started to fill that gap and other sources of credit, and it’s been really a very active space, I would say, over the past sort of five years, and it continues to accelerate. So there’s still a strong opportunity for banks, there’s still a big opportunity for credit unions, but there’s definitely a lot of money moving into the sector. And when you couple that with some of the other things happening in in terms of the elevated interest rates tied to capital requirements, more broadly and generally, lenders are being a little bit more sort of the scrutinizing risk, a little bit more. So it creates a very interesting environment where you see increased competition, but that increased competition is also coming from a newcomer that doesn’t necessarily have the same infrastructure that a bank or a credit union would have, so sometimes that can put them at a bit of a disadvantage. But conversely, there’s a lot more competition in the space.
Sarah Cooke
For sure, and we definitely seen a growth in credit unions, even merging banks into them so that they can buy that expertise. And so what are some of the challenges that credit unions that offer business lending today face, both obviously in the market environment, but also operationally?
Thomas Galbraith
Yeah, so obviously, a higher cost of funds, right? I think that’s probably one of the biggest ones. And as I mentioned before, increased competition. But there’s because of that competition, you also end up with borrowers being quite sensitive if you’re looking to get a loan, or if you’re trying to unlock some, some capital, you’re probably going to be very, very price-conscious, right? You’re running a business, you’re trying to run it efficiently. You’re trying to make sure that your capital is as cost-effective as possible. So some of those are some of the biggest challenges, I think, facing lending broadly and then specifically within credit unions there is that risk as well, that consideration. And then the biggest one across the board, really is just collateral risk. And that’s kind of why we exist, right? Like Barker was set up to address that, that collateral risk. And we see that across whether it’s a credit union, a bank or private credit.
Sarah Cooke
Yeah, and so explain asset-backed blending, if you will.
Thomas Galbraith
Yeah, absolutely. So asset backed lending, it’s simultaneously simple. And also starts to get quite complex at its core, right from sort of a base level, if you will. We’ll just use a very like easy example, right? So if there’s a business that has decided to spend we’ll use, like, made up numbers, $20 million and they’ve bought equipment. That equipment could be anything from a farm equipment, it could be industrial equipment. It could even be a private jet, if it’s needed, if the business is profitable enough, to
Sarah Cooke
I need one of those.
Thomas Galbraith
Haha, it could be any, any kind of piece of equipment or asset like that. So 20 million out of a out of a company put into those asset, or that asset is a lot of money, like for any business, that’s a lot of money. And so basically the as a business, you don’t want to leave that cash in that asset. You want to get that cash back out so that you can use it for operating costs, for other costs that may arise for different reasons, right? Like locking it up is not ideal. So that’s where a lender can come along and say, You know what? I will treat those assets, the trucks, the industrial equipment, the jet, whatever it might be, as collateral, and I will lend against that collateral for a fee. So it’s very similar to other types of lending. I’m sure everyone’s familiar with mortgages or anything like that. It’s a similar concept or auto loans. It’s just on a much bigger scale, and it’s for a business. So I think that’s sort of how I would strip it back to its core, kind of concept. It shows up in other areas. Some people, like receivables, for example, fall into asset-backed lending, and you can borrow against your receivables. I don’t know why receivables fall into asset-backed lending, but it does.
Sarah Cooke
That’s awesome. It’s good to know. And so you know, as investors are pulling back, I guess borrowing is the next most effective option for businesses. Yet, as you mentioned, the rates are higher. General costs of running a business are higher, you know, with inflation. And so how can credit unions that have been known for their member service and rates per year turn years, turn this into their advantage?
Thomas Galbraith
So I think one of the things, obviously, credit unions are known for right is this sense of trust and relationship and the focus on the members and all of those things, but trust really is a big one. A big one, and I think where they can really win is by kind of leaning into that trust. And I’m not trying to be kind of self-serving or facetious, like trust is important in lending, like you are developing a relationship between the borrower and the lender and a big part of that is trust. You need to the lender needs to feel confident that the borrower is going to do what they said they were going to do. They’re going to pay their interest on time, like the collateral is what they say it is, like all of those things. And we’re actually addressing one of those components of trust, which is the valuation right? So often, what will happen is a borrower will come to a lender with a valuation, and they’ll say, hey, look, this is what the asset is worth and the lender. It can be hard for a lender to really know if that’s true or not. Often, a valuation firm will be engaged by a borrower, not the lender, and even when it is engaged by the lender, the margins of error for most valuation firms are pretty significant, so it’s really difficult to trust that price. So you don’t it makes lending against assets sometimes difficult. So that’s really the biggest thing that we tried to solve for, which is why I think partnering with credit unions for us at least, makes a lot of sense, because we’re also bringing trust to the table and backing up that trust with our insurance providers as well. So I think that’s I would say, Yeah, I think the opportunity there for credit unions is to really lean into the sense of trust and the relationships that they’ve developed with their members, they are at an advantage to what another lender might come in and start at right, like they’re effectively starting from zero, and they have to gain the trust of the borrower. Credit unions already have that trust.
Sarah Cooke
Yeah, yeah. I mean, there’s so many things to trust the credit union to do. You trust them to have the technology up and running in the middle of the night when you have to buy something last minute, or, you know, trusting them to have the capital to lend you.
Thomas Galbraith
This is true.
Sarah Cooke
So I can definitely see where trust plays in that especially you’re when you’re kind of predicting or assessing what a piece of farm equipment might be worth that they’re going to borrow against. Do you expect credit unions to ride this momentum, especially now when you’re talking about essentially, what I seems to me to be essentially guaranteed loans. But talk a little bit about that. Do you do you expect there more to be more growth beyond the banks?
Thomas Galbraith
I do. I mean, if you look at, if you look at asset backed lending as a sector, depending on who you ask or believe, it’s about a trillion to $2 trillion and it continues to grow approximately 11 to 12% so it’s growing aggressively. A lot of that is private credit coming in, but there’s still a decent amount which is allocated to banks and credit unions. And then you look at, okay, well, why is asset-backed lending growing, and where is it growing? And I think the answers to those two questions are really that businesses continue to need more capital to grow to meet necessary targets for operational reasons, and, and I think there’s, there’s a real opportunity for, again, we’ve coming back to the trust component for an existing relationship to serve that need, and if you can serve it while being competitive and being risk conscious, right? So being risk conscious means that the credit union is well protected, but then also, potentially the borrower also is well protected. So I think that there is a tremendous opportunity for credit unions to grow far more than where they’re currently at in that sector.
Sarah Cooke
And so you mentioned also that you, when you were introducing the company that you’re use AI to do these evaluations. So, how can AI driven pricing engines improve, credit unions, business cloud, business loan collateral, and what are the benefits to the credit union and to the borrower?
Thomas Galbraith
Yeah, so we do, we do use, AI, and it’s not sort of a an off the shelf plugin. We actually built our own large language model, and we trained it on valuation data and content, and it now understands how to value multiple different type types of assets, and I think in terms of outside of applications of AI, for credit unions in other areas, and how they can make their business more efficient for this specific use case, right, like for using it on loan collateral. What we found is that our clients are able to implement a product like ours and then recognize that our pricing accuracy, our AI’s ability to price accurately, is so high and underwritten by insurance that enables our clients to improve their risk rating when they’re doing a loan, or they can reduce their cost of capital. They can recognize the risk transfer, which also unlocks potentially additional loan-to-value, as well as other benefits that the borrower may appreciate. So sometimes, with asset-backed lending, what you’ll see is a loan-to-value of 50 to 60% And largely that’s because the lender doesn’t know what the assets worth. So they’re like, hey, look this thing, you’re horribly wrong. And if it goes horribly wrong, then I’m going to guess that, like the assets, the collateral will sell for 50 cents on the dollar for what you said they were worth. Whereas we come in and we say, actually, we’re an independent valuation firm, and our AI is very accurate, and also, if we’re wrong, we will make up the difference, and that makes the lender far more comfortable, and they can increase their loan to value, potentially unlocking more cash for the borrower, which obviously the borrower is very happy about, because they’re using that cash and putting it back into their business for operating needs. So I think that’s really the biggest area where we’ve seen our clients, and also credit unions benefit is you can unlock a better profit margin, if you will, for your book, and you can also satisfy clients’ needs for more capital
Sarah Cooke
And do it faster. It seems like too.
Thomas Galbraith
This is true. This is true. We also have a very, very quick turnaround time. Yeah. Yeah, within like, 48 hours, depending upon, like, the assets, if someone sends us 20,000 widgets, then it might take a bit longer, but, but typically, it’s 48 hours. And most valuation firms you’re looking at weeks, if not months.
Sarah Cooke
And that doesn’t help either the borrower or their credit union. No, gotta get that money out the door. Start earning on it. Alrighty. Well, this has been really interesting. I think it’s a topic that we don’t address enough. We were talking earlier about how, you know, I’m not sure how many cranes are involved in this kind of borrow or lending. But, you know, it seems like it makes sense, especially now, as things are tightening. But anyway, I am going to I always allow my guest to have the final thoughts. What would you like to leave our credit union leader audience with today?
Thomas Galbraith
I think if there’s one thing that I would say, the one takeaway here is that there is a tremendous opportunity within asset-backed lending to serve a community that often credit unions already have access to, and you can serve them with a de-risked product. And I think that’s a win for everybody, because a lot of businesses do need more capital to operate. A lot of credit unions would like to do more lending, but they need to do it in a way that is as a good steward right you want to do the right loan for the right person with the right risk, and a company like ours can help make that happen. But even without us, it is a very interesting space that is moving and growing very, very quickly, and a lot of money is moving into it. And from what we see, for good reason, because there’s good yield, there are good clients, and you can underwrite the loans very well.
Sarah Cooke
And it’s always, they always need it. So thank you so much for joining us today, Thomas. I appreciate it.
Thomas Galbraith
Thank you. Thank you very much, Sarah.
Sarah Cooke
Have a great weekend.
Thomas Galbraith
You too. Bye.