Monday, May 18, 2009

Interest Expense Reduced by Over 50%!

Almost every business borrower will tell you that in today's current environment it is tougher to get a business loan and the lenders are charging higher rates of interest.

My client, a three year old healthcare staffing company, will tell you how I helped them increase their available credit and reduce their interest rate by over 50%!

Over the course of a two year funding commitment by the lender, my client could save as much as $250 thousand in interest expense.

This lower rate wasn't accomplished through a buy one, get one free promotion or a 3 day weekend sale.

It was accomplished by telling the borrower's story correctly to the right lenders and creating an auction environment so the lenders competed aggressively!

If your business needs to borrow up to $2 million and is currently borrowing at rates in excess of 15% (possibly through factoring), you might be able to achieve the same results!

To be eligible for these business loans, your business must be profitable and have a positive net worth. Accounts receivable and inventory will be the primary collateral for repayment of the revolving line of credit.

Need help finding the right lender or telling your story the right way for your business? Read "Matchmaking for Business Loans" and give me a call!

Tags : accounts receivable , factoring , SBA 7a loan , asset based loans , line of credit , working capital

Tuesday, May 12, 2009

Taking the Bite out of Rising Healthcare Costs

What do CFOs worry about when the credit crunch is not their main focus of attention?

In its most recent CFO survey by Bank of America, 67 percent of CFOs are concerned about rising healthcare costs. It is little wonder with healthcare costs expected to grow at an annual average rate of 6.7 percent between now and 2017.

In a survey conducted late last year by CFO Research Services, more than 40 percent of CFOs said they intend to reduce their company’s contribution to benefits in 2009.

Just how will they accomplish this? Will it be through a reduction of benefits, a transfer of costs to employees or a complete rethinking of the very nature of health plans?

To find out how companies might accomplish this, I spoke with Kelly Moore of Moore Benefits. Her company provides employee benefits consulting, brokerage, communication and administration for businesses with up to 200 employees, nationwide.

Here are three ideas Kelly mentioned that companies may use to save money on healthcare costs while remaining competitive in their benefit offerings.

First, companies might consider using a smaller network of HMO providers. In many cases, the more restrictive network allows for the same employee co-pay levels with a much lower premium cost. The savings can be substantial and in the range of 15% - 20%. The downside is that some employees may not have access to their provider as this smaller network will exclude the highest cost providers.

Second, many employers have realized a 20 to 30 percent reduction in premiums by replacing Co-pay plans with high deductible plans in combination with health savings accounts (HSAs). This is a good idea for employers who currently offer co-pay plans with relatively low out-of-pocket costs. The reason these plans have been slow to be adopted is the extra layer of paperwork in establishing, funding and filing claims from the HSA. Every carrier offers these types of plans and people from both extremes (high and low utilizers) can benefit from the savings.

Third, the most common way employers cut healthcare costs is a transfer of costs by increasing co-pays and deductibles. Moore agrees with CFO Magazine that employers may be able to make small changes to healthcare plans to minimize the increase in employee costs.

As lenders drill down on a borrower’s expenses and cash flow, healthcare costs will continue to draw their scrutiny. If you need assistance in getting a better handle on your company’s healthcare costs, give Kelly Moore a call at (949)872-2380.

Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : healthcare costs , chief financial officers , employee benefits , health savings accounts , HSA

Tuesday, May 05, 2009

Factoring for Agriculture, Meat and Seafood Industries

Obtaining a line of credit from a commercial bank if you are a distributor in the agriculture, meat and seafood industries can be a bit more challenging.


Laws have been established which provide lien status to certain suppliers in these industries which trumps the priority liens over accounts receivable granted a borrower to its senior secured lender. As a result, banks and other commercial finance companies tend to shy away from lending money to anyone but the most creditworthy borrowers from these industries. Poor margins, insufficient net worth, too much leverage or too much concentration? No bank loans for you!

So if you are a distributor in the agriculture, meat and seafood industries, what alternatives for lines of credit exist if you are a less than perfect credit?

I work with a non-recourse factor who loves to finance distributors in the agriculture, meat and seafood industries. By purchasing the invoice rather than lending against it, the factor controls the security interest in the accounts receivable even when the distributor has failed to pay its supplier.

This particular funding source provides non-recourse factoring lines of credit in amounts starting at $1.0 million. The effective cost of this money ranges from 15-18% which is more than competitive with the most aggressive factoring rates from even recourse factoring!

A key to obtaining this financing is to have a well balanced list of customers whose creditworthiness can be readily confirmed.

If you are a distributor in the agriculture, meat or seafood industries and need help finding the right lender or telling your story the right way, read "Matchmaking for Business Loans" and give me a call!

Tags : agriculture , meat , seafood , distributors , accounts receivable , recourse factoring , PACA liens , PSA liens , lines of credit , credit insurance