Back in the Saddle…Again

After almost six years in commercial banking, I have returned to advising growing businesses throughout the USA on a wide variety of asset based funding solutions.

Companies who can benefit from my services are often non-bankable credits who lack access to capital for reasons including short time in business, hyper-growth sales, weak cash flow and highly leveraged balance sheets.  These companies will typically have revenues of $500 thousand to $30 million and will have B2B accounts receivable, inventory and equipment that can be offered to a lender as collateral for repayment of a loan.

If your business has receivables, inventory and receivables and needs over $50 thousand of financing, please contact me at 310-344-2522.

Asset Based Lending Grows

Asset based lenders have stepped up to fill the capital gap caused by the credit crunch for borrowers both large and small according to The Wall Street Journal (subscription required).

According the Journal, asset based lending may have increased by double digits in 2009 after an 8.3 percent increase in 2008. Given the article was focused on small business, it would have been more interesting had the Journal been able to learn the percentage growth of asset based lending for deal size less than $10 million.

The Journal notes that drawbacks of asset based loans include relatively high interest rates. Asset based loans can range as high as 35-40 percent per annum when a borrower is using factoring or purchase order financing. However, there are some lenders that will provide asset based loans at rates in the single digit range. Even the SBA has a program that provides asset based lines of credit at rates currently below 10 percent!

Also this past week, the Federal Reserve's January 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices was released.

The January survey indicated that commercial banks generally ceased tightening standards on many loan types in the fourth quarter of last year but have yet to unwind the considerable tightening that has occurred over the past two years.

Expect to see asset based lending continue to grow in 2010!

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 : Asset based loans , factoring , purchase order financing , lines of credit , SBA loans

Note to Self: Line Up Financing First!

According to Inc. Magazine, Sam Braunstein didn't wait until she lined up a million dollar deal with Walmart to line up her financing.

Braunstein was completely prepared before discussions proposing a national launch of her products with Walmart, including making financing arrangements. Her company, Wellgate Products, delivered and has achieved product placement at 8,500 stores for big retailers including Walmart, Target and Kmart.

If you're about to line up a big sale, check with your lender in advance to make sure they can support your requirements to increase accounts receivable and add extra inventory.

Consider financing solutions including vendor assurance agreements, purchase order finance and factoring if your existing lender can't accommodate your financing needs.

Need help finding the right lender who can support your big sale? Read "Matchmaking for Business Loans" and give me a call!

Tags : Inc. Magazine , working capital , cash flow , accounts receivable , Wellgate Products , Walmart

When Your Supplier Says No

Own a small or medium sized business that manufactures or distributes products to other businesses?

With the credit crunch gaining steam, chances are that your customers are taking a little more time to pay your invoices. Depending upon your working capital situation, you may be falling a bit behind on paying your own suppliers.

What will you do if your suppliers then cut off your credit leaving you without the ability to ship product to creditworthy customers?

This was exactly the predicament facing a distributor of safety products who sells to businesses, municipalities and government agencies. Fortunately for this business, their accountant was recently introduced to Funding 911 and gave them my phone number.

In less than a week, Funding 911 arranged for a vendor assurance letter and a factoring facility. Knowing it would receive the first proceeds from the factoring of the invoice, the supplier has agreed to ship product to fulfill three major purchase orders enabling the distributor to significantly grow its business.

The vendor assurance letter also enabled the distributor to avoid the costs of purchase order financing which can take a bite out of your margins.

Do you need help finding the right lender who can come up with a fast, creative and cost effective financing solution for your business? Read "Matchmaking for Business Loans" and give me a call!

Tags : factoring , accounts receivable , vendor assurance letter , working capital , cash flow

When Supplier Credit Runs Out – Purchase Order Financing Steps In

Have you been in this situation before? Your company is growing rapidly and your suppliers are unwilling to extend any further credit so that you continue to meet the requirements of your customer.

You might turn to your bank (if you have one), but they express concern over your length of time in business, your customer concentration or your high growth rate. Besides, lending in order to help you fulfill purchase orders is not necessarily included in their product offerings.

Purchase order financing is an option you might consider – with a firm order for a creditworthy customer, you can borrow enough money to cover your cost of goods sold. If your margins are at least 15-18%, this may be a quick solution to keep you on track to grow your company’s revenues!

Related Tags: factoring, accounts receivable, p.o. financing, purchase order financing, bank loans, equipment leasing, working capital, cash flow

Purchase Order Financing - A Tool for Explosive Growth

The phone rings with the call for which you’ve been hoping. You’ve just landed that big sales order that will catapult you to the next level. Deliver the goods on schedule and your customer has told you they will commit to volumes that will significantly increase your revenues and profits for the next twelve months and beyond.

Just before you pop open the bubbly, you realize that you don’t have the cash to buy the raw materials, hire the extra needed workers or pay for the shipping of sub-assemblies. You’ve exhausted your own capital base. Your bank has reached its limits on how much it will lend you. Finding another bank loan might take weeks. Finding an equity partner will likely take even longer and you’ll also have to give them a piece of your company.

Your dreams of success and glory fade as you now visualize a missed immediate opportunity and lost future sales. Of equal if not greater concern are the potential negative ramifications once other customers or your competitors find out you have reached your limits!

Where can you get the cash?
Purchase order financing can be the right tool for your company to take advantage of a variety of sales opportunities in situations resulting from high growth to seasonal increases in business. Plus, it’s not just for growth companies as it is also available for startups and even turnaround candidates.

Companies from a wide variety of both manufacturing and services industries (with the exception of the construction industry) have utilized purchase order financing for both finished goods and non finished goods. This tool for explosive growth can be used to meet your sales goals in purely domestic as well as import and export situations.

If you have gross margins of at least 18 percent on the sale of your product, purchase order financing can enable you to drive your sales skyward. Like any financing, the cost of utilizing purchase order financing can vary. As a rule of thumb, the purchase order financier will charge a transaction fee in the range of 4 to 7 percent of the gross amount funded. The fees may be higher if the amount of time to deliver the product or service exceeds 30 days. The financier will fund a maximum of 100 percent of the costs to produce your product or service which can include deposits, raw materials, components, sub-assemblies, overhead, labor costs, shipping charges and letters of credit.

Upon completion of the product and shipment to your customer, you’ll be expected to re-pay the purchase order financier. This is often accomplished by taking the receivable generated upon shipment of the goods and financing it with a factor or other lender (possibly your existing bank). A factoring or other financing fee may also apply adding another 3 to 6 percent to your total cost of this financing to complete this sale. Advance rates on the receivable financing can approach 85 percent of the invoice amount allowing you to fully repay the purchase order financing.

It’s all about the collateral
Each purchase order financier will have its own documentation requirements with the purpose of determining if you have a verifiable, non-cancelable order for your product with a creditworthy customer. Also, if your current lender has a blanket lien on your assets, the purchase order financier will ask for a release on the assets associated with the financing transaction.

So the next time the phone rings with a big order and you hear a loud, pounding noise - just relax! That’s not your heart exploding in fear. It’s opportunity knocking at your door!


Click here to read "Matchmaking for Business Loans"


Related Tags: factoring, accounts receivable, p.o. financing, purchase order financing, bank loans, small business, working capital, cash flow, business loan