Ok, I’ve started this post twice…hopefully I can get it done this time. Last time the word press gremlins just made my draft disappear and I had not saved a backup. I learned my lesson!             

In any event, on to the post…….I think.

The phrase, it’s just “Too good to be True!” and the early days of factoring are two of the most difficult obstacles that we, as cash flow consultants, have to overcome in educating and informing small business owners of the funding options we bring to the table.

And, I had no idea of the wealth of information out in “internetland” on the phrase, “too good to be true” until I started researching it for this post. So, in this post, I’ll just deal with this first obstacle (too good to be true) and we’ll deal with the second one (factoring’s reputation) in another post.

OK, I’m an optimist to the inth degree; I (usually) see the glass 2/3 full. Sometimes, however, when I make mistakes in judgment, I really doubt that philosophy and wonder if I was mistaken to have it in the first place. But, then, usually something, such as some of the info I found in my research for this article comes around and makes me glad that I am the way I am. Not trying to pat myself on the back here, but I feel it is unfortunate that more people Don’t have this outlook. I found some validation for mine in my research. And, how cynical and uncreative would this world be if we just wrote off all innovative, creative and “new”, advanced ideas as too good to be true!

Check out this article by Erik Brady, USA Today:

“It’s official. We don’t believe anything anymore.

Dale Earnhardt Jr. wins a race at the track where his father died and the skeptics cry fix. Cal Ripken Jr. hits a home run in his last All-Star Game and the world wonders if he got a fat pitch. The Philadelphia 76ers reach the NBA Finals and some Milwaukee Bucks suggest that referees favor the team with more TV households.

We are becoming a nation of Oliver Stones, joylessly searching out conspiracy theories every time a story seems too good to be true. Nothing wonderful just happens in sport anymore, at least not without some fanciful notion of a great and powerful Oz scripting reality from behind the curtain.

History tells us our sports events are fixed sometimes — read more here

There’s a book, movie, song and blog named Too Good to be True!   To mention only a few! 

If ever I felt validated about taking that chance to believe that something “might” be as good as it claims to be, it was a passage I found about Einstein…..

Albert Einstein once said, “I never discovered anything with my rational mind.” In our context, the comment, “too good to be true,” might have just been the prod Einstein needed for his next great invention because Einstein didn’t think like that. I can see Einstein asking you “Why?”, if you were to tell him something like it’s too good to be true (and then figuring out how to disprove you)!

As has been said before, too much of anything is never good. And so it is, I contend, with the blatant thought of “it’s too good to be true.” When a person automatically thinks this Stinky Thought (as far as I am concerned) about a new, innovative and/or revolutionary idea how many of the well springs of our creative juices shut down? If, in fact, this “too good to be true” saying were completely true we would not have any of the inventions or advances we have now because those innovators would not have dared to believe it could be “true”.

“Noooo way, you can’t do that”; “that’s impossible to do” soon turn to “that’s too good to be true”………. when the successful innovator figures out “how” it IS possible to do it.

First, this innovator receives no encouragement to “try” to overcome the obstacle and then no congratulations but disbelief when it is overcome!

It’s not surprising, then, to know that the innovators and entrepreneurs among us are only a small percentage with these objections and obstacles to overcome. What more could our great country have accomplished had we not turned into a country of Stinky Thinkers?

And, I admit there “are” a lot of things that are, in fact, to good to be true but should that stop us from looking for the next great invention, song, thought, movie or business funding opportunity?

Are we so negative and pessimistic today that we just automatically say, nah, that’s too good to be true and pass up a chance to be creative and look for alternatives to fixing our cash flow problems.

Yes, skepticism is indeed needed.

Here’s an interesting quote I found on Scientific Skepticism,

“Skepticism is a primary tool of science. We’d be hypocrites if we never directed a skeptical eye towards Scientific Skepticism itself. Denied imperfections and errors are free to grow without limit, and Skepticism is not immune to this problem. Unbridled gullibility can destroy science, but unbridled disbelief is no less a threat because it brings both a tolerance for bias and ridicule as well as the supression of untested new ideas. Better to take a middle road between total closed-mindedness and total gullibility. Practice pragmatism, pursue humility, and maintain a clear, honest, and continuing view of ourselves and the less noble of our own behaviors.”

Hopefully the small business owner I am talking to here has a sound judgment, adequate education and the ability to look at a creative, new, out-of-the-box funding alternative and assess it for its true worth – be that too good to be true or, in fact, a newfound funding option just in the last 15 years or so becoming readily available to the small business owner as it has been to big business for many, many years.

You judge, too good to be true or not?

Until next time….Debra

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Examples abound of the cash flow industry hard at work but the majority of those the everyday public is aware of and have heard of are the ”big” ones (examples).  Because….these funding tools have always been around for big business but now thanks to the development of the cash flow industry and brokers, we are bringing these same tools down to the level of the small guy and soon they will seem as commonplace as some of the “big” ones.  We are leveling the playing field!

For example, we’re starting to see more ads for the purchase of timeshares, lawsuit funding ads and for life insurance which have not been there previously.  These are the smaller instances of this industry at work (i.e. the fundings are not in the Millions).  But, as the SBA says, the total of small business is bigger than big business and that is exactly why the cash flow industry has grown so much - this vast resource for investors has gone untapped for a long time and, similar to China, the sleeping giant is waking up.

So for a first example of a large transaction:

“Louisiana receives slice of $55M tobacco settlement” New Orleans City Business.

State receives slice of $55M tobacco settlement
Louisiana will receive $1.2 million from a $55.4-million settlement reached with House of Prince A/S and Scandinavian tobacco connected to the 1998 Master Settle Agreement.

The MSA requires tobacco manufacturers that signed the agreement to make annual payments to states, in part, to compensate them for billions of dollars in health care costs associated with tobacco-related illnesses.

The House of Prince settlement resolves a three-year court dispute over whether cigarettes made by its subsidiary Scandinavian and sold in the United States from 1999 to 2003 were subject to MSA payment requirements. Cigarettes made by Scandinavian haven’t been sold in the United States since 2003.

— CityBusiness staff report

Will add more as I come across them.  Now that I want to find some examples I can’t seem to locate but will update this when I do.

As Always, Be Safe.  Debra

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to make the deal happen!

Talk about contrasts to the banking scenario — check out this case study of an actual deal done by one of our funders.  But, first, let me just state, I am NOT, in any respect, trying to belittle banks — all small business should strive to become ”bankable” as quickly as possible. 

What I am saying, though, is that there are stark contrasts in the banking scenarios as opposed to the cash flow industry’s and I am trying to adequately document just how we work and how we fill a niche and very significant need of many small businesses with cash flow problems.

That being said, please check out this real-life example of a factoring deal:
 

The funding source received an e-mail from an effective and efficient consultant, Alice, on August 12, 2005. Alice was referring a prospect, Henry.

Henry’s company is in the business of asbestos abatement. Henry had been referred to Alice by his banker, Amanda.

In her initial correspondence, Alice informed the funder that Henry’s contracts, mostly with governments, are bonded. Henry has several loans with Amanda’s bank, and thus Amanda has a blanket lien on everything. However, Henry is current on all his loans, and his bank is willing to release (subordinate) Henry’s receivables so that he can factor and improve his cash flow.

Henry has never heard of factoring, but with Alice’s quick educational session and with Amanda’s prompting and blessing, Henry reluctantly agreed to explore the factoring possibility.

By examining all the information and documents that Alice sent for the deal, the funder found out the following (about Henry’s company):

• annual revenues are about $9 million.

• is considered a construction company (progress payments, retention, bonding, etc.).

• Henry’s loans to Amanda’s bank amount to about $500,000.

• Henry owes the Internal Revenue Service about $56,000.

• Henry’s contracts are generally bonded.

• The accounts receivable and the accounts payable are mixed together in one report that requires some decoding.

A conference call with Henry and Alice was scheduled for August 17. The objectives of the conference call for the funder were:

1. Get a feel for the prospect

2. Establish that he has a cash need

3. Get some relevant information and clarify certain issues

4. Analyze his cash flow needs

5. Propose a financing solution

6. Get a mutual agreement on the proposed solution

During the conference call, it was mutually agreed that factoring would solve Henry’s immediate cash flow problems. After the value of the funding company’s factoring service was established, Henry’s reluctance to factor disappeared, and he asked about the next step and how to expedite the process.

There were major issues that had to be resolved, though, before any funding could occur, namely:

• The IRS issue had to be resolved in a way that was acceptable to funding source.

• CB had to subordinate its position to the funding source on the invoices to be funded.

• The bonding company had to agree to factoring by the funding source.

Henry concurred. The application form was sent to him; he completed the same day and returned to funding source with all the requested documents. The funding source faxed him that same day their factoring proposal. He accepted their proposal and sent it back the next day.

On August 18, the same day the Funding Source received the signed proposal, they sent him their full factoring agreement package by overnight mail. On August 19, Henry executed the factoring agreement and sent it back. The whole process of conversion, including executing the final documents, took less than three days.

On August 19, the funding company’s due diligence was immediately begun, in addition to working on resolving the above-mentioned three major issues. At the same time, to expedite the process further, they asked Henry to start sending them any invoices he needed to factor so that they could work at the same time on the verification process.

They encountered quite a few challenges along the way before being able to fund the first invoice:

Challenge 1: The bonding company refused to cooperate.

Solution: The Factoring Company agreed to factor the invoices for the contracts that are not bonded.

Challenge 2: CB did not accept their first draft of the subordination agreement.

Solution: The Factoring Company negotiated a compromise with Amanda and Henry by which CB subordinates only the invoices related to nonbonded contracts. A subordination agreement was finally executed on September 16, 2005.

Challenge 3: Amanda of CB was on leave from her job for more than two weeks.

Solution: The only solution was to wait for her to come back.

Challenge 4: CB requested some returns from the factored invoices to reduce Henry’s debt to CB.

Solution: The Factoring Company negotiated again with Henry and Amanda to have 10 percent of every factored invoice go to CB. The Factoring Company drafted an Intercreditor Agreement that was finally executed on September 26.

Challenge 5: Resolving the IRS issue

Solution: A written settlement was signed by the IRS on September 29, 2005.

Challenge 6: Henry’s customer’s creditworthiness and concentration were issues.

Solution: Since initially The Factoring Company had to work with only one customer with average credit, The Factoring Company requested and received proof of payment of previous invoices by that customer.

Despite all the challenges, The Factoring Company managed to fund the first three invoices, totaling more than $200,000, on Sept. 20, 27 and 29, respectively.

I think, by now, it should be very clear to all the extent to which a quality funding source will go to achieve its main goal of helping small business!

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Objections are a part of life and certainly business - especially when there is a new idea, thought, process or product.

So, learning to address them right off the bat - especially in the business sense — is critical to success in business.

Some of the most common objections heard in the cash flow industry about our non-traditional funding options:

Objection:  We don’t need it!

Response: 

What kind of terms do you give your customers?  How long does it take them to pay? Could you manage your business better as well as finance its growth if you had that money sooner rather than later? 

Objection:  It sounds too good to be true!

Just because you haven’t been exposed to this financial service doesn’t mean
that it doesn’t exist.  Its been available to big business for a while and is just now becoming available to the small business owner – as is the norm unfortunately!

A for instance, the cash flow industry is about trading paper, right?  So, are you a homeowner by chance?  And, if so, have you ever had to change the name of the mortgage company you make your payment to?  “This” is an example of paper being bought and sold (traded) in the cash flow industry and it has been going on for a long time — with BIG business and usually in “portfolios”.  Now, however, this tool has been made available to small business.  As I’ve said over and over again, the total of small business is bigger than big and the smart investors we work with have realized this and made the same financial tools available to the little guy now.

Objection:  We do that ourselves!

It may sound like our funders act like a collection agency but believe me they are not.  They advance money to your business based upon your invoices to your business customers and wait for them to pay.  Meanwhile, you have the use of the money to better manage your business and to finance it’s growth.

Objection:  I’ve heard of factoring, but I’m too small!

Businesses with cash flow issues – small or large – benefit from factoring
to keep the cash flowing in their business.

Instead of waiting for your customers to pay your invoices, would your business benefit from having most of that money right away – regardless of the size of the invoice?

Would you be more comfortable with a factoring program that doesn’t require a minimum monthly volume and doesn’t require an annual contract – no problem – we have factoring programs to fit the various sizes of small business owner (we can factor $50 limousine charges or invoice volumes of $1M and above a month).

Objection:  We already have a credit line!

Great; but how big is it?  Does it automatically increase as your receivables increase or do you have to apply for a larger line?

Would you like to have access to larger amounts of funding without having to go through the application process?

Factoring is a receivables “Only”-based line of credit that grows as your
receivables grow with no application or specific request for increased funding needed!

Factoring ALSO works in conjunction “with” your existing credit line to, in affect, allow you a “second” line of credit based solely on your receivables.

Objection:  We see the benefits of factoring, but we’re afraid our customers will think we’re in financial trouble and will look for alternative sources for our product or service.

In no uncertain terms, you can let them know that the fact that your company
“does” qualify for factoring makes a powerful and positive statement about the strength of your finances and the factor’s level of confidence in your business!

If another business owner received a multi-million dollar credit line from his bank, what would you think of him? 

Our funders provide a virtually unlimited line of credit to you based only upon your receivables as collateral.  You should remind (or inform) them that you (as the savvy business owner that you are) wish to take advantage of a funding tool of which you were previously unaware that can ease the ebb and flow of cash flow so that you can concentrate on what you do best – providing them with the quality service or product for which they have come to you and it keeps you from having to worry about cash flow issues.  As with most things, when we use the “tools” available, whatever the “process” or chore is, it is accomplished with more ease and speed when available “tools” are used.
Now that we have a hammer, will we go back to pounding nails with a stone?
You are using the tools available to you to help your business grow and
deliver the best service or product.

Objection:  We wouldn’t do that to our customers!  We’re afraid it will offend or alienate our customers!

You are dong it FOR your customers! 

Would they like it if you went out of business because of cash flow issues OR had to change your terms to COD?

You should let them know that factoring will enable you to continue to provide the high quality product or service they have come to expect without having to change payment terms so that they can continue to enjoy the generous trade terms you provide, i.e. 30 days or more, that factoring will enable you to continue to provide “for their benefit”.

Objection:  Must the customer be contacted?  If so, what do you tell them?

Yes, they must be contacted.

Generally, in the process of verifying an invoice, your customer is told that you have been provided an unlimited credit line based on your accounts receivable and we are providing receivables management in conjunction with that credit line.  Now how impressive is that?  If they are having cash flow issues themselves, they might just want to check it out themselves!

But, basically, in our communications with your customers it is referred to this way with the additional information that you have received it to accommodate the growth that you are experiencing.

Its largely, too, a part of you being confident in your choice to use this tool and the posture with which you relay this to your customers.

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Hi, All - I know it’s been a while but lots has been going on and it has kept me from blogging.

 But….I’m bbbaaaccck!

Have you ever heard the saying, “A contract (with the government) is like Money in the Bank?”

Have you ever tried going to the Bank with that contract to get an advance against it to help fulfill the huge contract you just landed but need to hire additional personnel and purchase additional inventory, raw material or the such?  Not quite as easy as you thought, right?

 Have you ever heard the saying something to the affect that, “the only time you can get money from the bank is when you HAVE money in the bank?”

Well, in the cash flow industry….it IS money in YOUR bank account!  Please check out this real life example I personally came across and I’ve previously posted but think it very much illustrates this and bears reviewing here:

Right after Katrina, a purchase order funder in the asset-based lending industry was able to help a NY power company fulfill a $2.2M order from the USACE. The power company’s bank was not able to process their funding request fast enough and they were about to lose the order. The purchase order funder (in Dallas) took the application on Wednesday and the order was being shipped by Friday of the same week. The power company was able to fill that order and other future ones due to the speed with which they were able to get the funding they needed.

Now if that contract shouldn’t have been a “Money in the Bank” situation I don’t know what would qualify!

I’m not bashing banks or bankers at all.  I get a lot of referrals from bankers.  What I’m saying is that this saying just isn’t necessarily true and I, for one, would like to say so here. 

The cash flow industry offers the flexibility and speed oftentimes required for special situations which just does not fit the banking business model and it defintely fills a gap in funding alternatives for small businesses – i.e. prior to the business having the financials required by banks and in conjunction with a banking relationship when flexibility and speed are called for and at other times as well.

Anyone else have any stories you can relate about this misconception?

Night…..Debra

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HOW DID YOU LEARN ABOUT ALL THE DIFFERENT FUNDING OPTIONS AVAILABLE TO PEOPLE EVEN AFTER BANKS TURN THEM DOWN FOR A LOAN?
 
Through hours of study and a training course with the American Cash Flow Association as well as working with a Mentor for the first two years. 

And, it’s been interesting for me to learn that MBA graduates and students and others in the financial services realm you would think would be very knowledgeable about the options available in the cash flow industry for the funding needs of small businesses are not aware of these tools at all (or very little).  Or, they do not give enough import to these options (if they are aware of them) which are so desperately needed by small businesses.  The tools of the cash flow industry seem to be glossed over and not really acknowledged as the option they are. 

For instance, I met with an MBA student (Electrical engineer) who was in her last semester before getting her MBA and she happened to have a class on our funding options that semester and a homework assignment on them the same weekend we met and talked.  So, she told me, “thank you very much!” and took my literature and flyers I brought to our meeting and used to complete her homework assignment!
 
WHO ARE YOUR CLIENTS?

Almost any business that has a piece of paper to leverage.  Construction is sometimes difficult because of retainage fees but it can be done too – by companies that specialize in construction. 

Some examples, though, are:

Medical facilities of all sorts
Manufacturing
Service industries of all types – staffing agencies, trucking, fabricating, engineering, printing, import, export and the list goes on and on…
  
IN YOUR YEARS OF EXPERIENCE, WHAT OBSERVATIONS CAN YOU MAKE ABOUT SMALL BUSINESSES ON THE THRESHOLD OF GROWTH?

I would say that I have observed that oftentimes they are afraid to go for the larger clients and faster growth because of fear of the resultant cash flow issues.  But – that need not be the case! 

Now, the small business owner can do just that and know that the tools offered in the cash flow industry can assist them in accomplishing faster, more rapid growth!  It all goes back to educating and making people “aware” of the options available to them. 

But this, too, is one of the many reasons I love this business I have found!  I like being able to help people and when I can do that and myself in the process, I call that a win/win situation!

WHAT IS THE CASH FLOW INDUSTRY ALL ABOUT AND HOW CAN IT HELP?
 
In a nutshell, it’s about leveraging a businesses “liquid” assets to  self-finance it’s own growth and expansion without incurring debt or giving up equity in the business.  It looks good on the balance sheet  because it is not a “loan” per se but a “sale” of a liquid asset of the business.

The asset-based lending industry is what I call a close cousin to the cash flow industry in that it is more often an actual loan with liquid assets as collateral.
 
WHAT IS THE MOST IMPORTANT PIECE OF ADVICE YOU WOULD LIKE TO GIVE OUR LISTENERS? 
 
Well, at the risk of sounding like I’m promoting myself –  but I think if your listeners agree about cash flow being such an important issue for small business owners – my most important piece of advice would be…..
 
If you have cash flow issues and your traditional funding sources haven’t  been able to help, check with a cash flow consultant — whether that be me or some other cash flow consultant. 

And, I don’t say a funding company that does the actual funding (for example, factoring of accounts receivable), but a “cash flow consultant”, in particular, because there are soooooo many different funding niches/sources in the cash flow industry that a business owner can get lost in it  as easily as in the traditional funding arena.  The cash flow industry  is very, very niche  oriented and that is where a cash flow consultant’s expertise comes into  play — to assess the business owners needs and direct them to the  appropriate funder and save them time and effort and let them do what they  do best…..run their business without worrying about cash flow issues!

So, whether it be me or some other cash flow professional, be sure to check out the funding tools in our industry to supplement the fulfillment of your funding and cash flow needs!
 

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Hi, All -

I was recently interviewed byLinda Coughlin, the owner of Paralelles.com, and host of the radio show, One Big Life, about the alternative small business funding options I work with and I would like to share that interview with you here

There are two other interviews besides mine on the  show but I am about mid way if you wish to fast forward to it.  Let me hear back from you once you’ve listened with any questions or suggestions for future interviews!

We did not have the time to cover all the questions I had been sent as possibilities for discussion, so I thought I would take my preparatory notes for the interview and share those with you here.  I figured if Linda had these questions, you might too!

HOW DID YOU GET YOUR START?

We did cover this on the show but I will recap here too.

I got the entrepeneurial “bug” about 12 years ago when I had my first business and have been looking for something I could really enjoy for this period of time. 

I found the cash flow industry in early 2003 and started out with the plan to deal with the leveraging of owner-financed real estate notes. 

I told an associate about the “cash flow” industry though, and he gave me a hot lead for a pipe fabricating company here in Louisiana with a large contract with Bechtel Corporation and we ended up doing $3million in accounts receivable factoring for it on my very first deal in this industry! 

So, I considered the fact that real estate and I were not really getting along with a lot of number crunching and this new area seemed so much more to my tastes that I would focus instead on accounts receivable factoring, purchase order funding and contract funding.

And for those still not sure what exactly the ”cash flow industry” is about - it is about helping a business to leverage its liquid assets to self-finance its own growth, expansion and daily working capital needs, without acquiring debt or giving up equity in its company.

Factoring of accounts receivable is the most commonly used tool in the cash flow industry.

WHAT IS THE NUMBER ONE REASON FOR BUSINESS FAILURE IN THE U.S. AND WHY?

Lack of working capital!  Cash Flow!  You’ve heard the saying, “Cash is King”, right?  Well, there’s a reason it is out there!  When you’re not able to  focus on your “business” and have to worry with cf issues everything suffers.  That’s true for us in our personal lives too, I think.  What is one of the number one reasons for discord in a marriage or personal
relationship?  Money matters.

Plus, even if you have a great product or service, to be able to produce or get it out there for your customer, you have to have cash flow!

These two, plus the first question below were covered on the show.  I will break this post here and continue on into a second one for the rest of the questions and answers I had prepared for this interview.

Until next post.  Debra

(Here’s the rest of the questions to follow.)

• How did you learn about all the different funding options available to people even after banks turn them down for a loan?
• Who are your clients?
• In your years of experience, what observations can you make about small  businesses on the threshold of growth?
• What is asset-based lending all about and how can it help?
• What is the most important piece of advice you would like to give our listeners?

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This post is intended for my “personal” blog which is hosted by eblogs and seems to be down to me right now for some reason I have yet to figure out.  So, I’m posting here and will edit and transfer it to my personal blog when the server comes back up (I guess?)

There’s a wonderful article in the Advocate today entitled Honoring Organ Donors that I thought I might call to your attention.  It’s about a local (Louisiana) family’s memorable and noteworthy contributions towards this end - organ donation.  Two members of one family within one year’s time made organ donations and they are being honored in The Tournament of Roses Donate Life float, called “Life Takes Flight” and I thought I would like to honor them here too.

I’ve got the “Organ Donor” heart on my driver’s license but I have to admit the thought of what that really means scares me when I really stop and think about it but not enough to stop me from having it noted there.  I am a person who very much likes to help others which is what I feel I am doing with my business and personal life and this is just another step in that direction.

What about you?

Debra

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to help fund your small business!  And the list continues to grow as new ones are discovered as needs arise and creative entrepeneurs and investors figure out a win-win situation for both sides!

But, what “are” the 60 Cash Flow Income Streams Which Can be Sold in the Secondary/Cash Flow Market?

Well, the most commonly known are - private mortgage notes and business invoices. 

But, there are many more.

Business-Based Income Streams are comprised of cash flow streams paid to a business by another business, individual, or government and some examples are: 

Accounts Receivable

Aerospace leases
Bankruptcy Chapter 11 reorganization plans
Bankruptcy receivables
Commercial contracts
Commercial deficiency portfolios
Commercial leases
Construction receivables
Equipment leases
Equipment timeshares (or “fractional ownership interests”)
International receivables
Letters of credit
Medical receivables
Partnership agreements
Purchase orders
Sports contracts
Trade acceptance drafts
Warehouse inventory lines

Collateral-Based Cash Flow Income Streams

Aerospace notes
Automobile notes
Business notes
Collectibles notes
Equipment notes
Homeowner/condominium assessments
Marine notes
Mobile home notes
Private mortgage notes
RV, Motor home and business vehicle notes
Tax lien certificates and tax deeds

Contingency-Based Cash Flow Income Streams

Commercial judgments
Commissions
Consumer judgments
Corporate charitable contributions
Franchise fees
License fees
Royalty payments (including mineral rights fees)
Sales Revenue

Government-Based Cash Flow Income Streams

Farm contracts and conservation reserve payments
Lottery winnings
Tax refunds/credits
 

Insurance-Based Cash Flow Income Streams

Annuities
Casino winnings
Corporate retirement plans
Funeral purchase assignments
Prizes and awards
Structured settlements and class action awards
Viatical settlementsCemetery pre-need contracts
Consumer-Based Cash Flow Income Streams

Cemetery pre-need contracts
Certificates of deposit
Consumer Contracts
Credit Card charge-offs
Delinquent debt
Health and country club memberships
Inheritances
Trust advances
License impounds
Retail installment agreements
Student loans
Timeshare and vacation club memberhips

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In eighty-five (85%) percent of the cases when “small” businesses are sold, the seller must carry back the financing for a large part of the sales price or the full price itself.

Financing to buy a business is not like getting a loan from your banker to buy a home.  Real estate is usually not involved and, therefore, there is no “collateral” a bank can really attach a lien to thereby making the transaction more difficult.

Additionally, many times whenever a business is sold, the buyer does not have adequate funds for a complete purchase.

At that point, the buyer and seller agree on a down payment and sign a contract specifying how the remaining payments are to be made over time. The owner creates a note for the buyer. This is a business note. This business note can be sold for cash.

There is such a broad range of  business notes that can be purchased, it would be impossible to list them all.  However, some examples include the following:

1. Restaurants

2. Convenience Stores

3. Florists

4. Medical/Professional Practices

5. Laundromats

6. Dry cleaners

7. Printers and many others

Who is a business note buyer?

A business note buyer functions very much like a private mortgage buyer. Let’s say there’s a potential buyer of a business who cannot qualify for a commercial loan. In today’s world he’s not out of the running, because he can be financed through a business note buyer. The business note buyer represents a consortium of investors who specialize in this type of investment and liquidity is not a problem.

Fast Cash For Businesses

The seller of the business structures a private loan for the business which:

• 1.  A note is bought by a business note buyer at closing or

• 2. After a substantial downpayment and several months of seasoning (i.e. regular payments), the note will be purchased by a business note buyer.

The business has changed hands successfully for both parties, often in a very short period of time. Basically this means fast cash for the seller, and an easy loan for the buyer.

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