Small Business Funding Alternatives

Retail Merchants – Frustrated with your lack of business funding options? By Debra Maples

 

What’s a busy retail merchant to do when it needs extra working capital?

 

“Oh, NO!!! - Not the gauntlet,” you think – taking your valuable time (and patience) to deal with the “paperwork” required by traditional sources!

 

Correct! You got it! Not the Guantlet! And let me tell you why!

 

Today – there is a better, easier, more reliable, convenient and FAST way to obtain lines of business credit for merchants!

 

“HOW?” you say; tell me more!

 

Okay, I will — since it is my goal to help educate small business owners as to all the alternative financial tools available to them today that were not previously available – that’s just what I intend to do. So, listen up because this is exciting stuff!

 

Any vendor or merchant who accepts credit/debit cards can easily get an advance from their “future” credit and/or debit card receipts!

 

Remember, the folks I work with help a business leverage its “liquid assets” so that no “debt” is created and added to its balance sheet. In fact, many businesses use the options we offer to retire “loans” and “strengthen” their balance sheet!

 

So, those little bitty chunks of paper — those future credit or debit card receipts — are pieces of paper with a dollar value attached to them, right? And, what can you do with them in the asset-based lending industry? You got it! You can “leverage” them! They are a “liquid asset” of the merchant’s business.

 

Using this non-traditional, debt-free funding tool, we have helped businesses by providing money for:

• Equipment and inventory purchases

• Cash flow needs for seasonal businesses

• Renovating or remodeling your business

• Advertising

 

So, “Give me some details,” you say!

 

How does it work?

 

The funding source will literally purchase your “future” Visa/MC receipts in the form of a cash advance.

Generally:

• You are advanced from $1,500 up to $250,000 based on your previous average monthly sales receipts

• A small fee is deducted from your ongoing “future” Visa/MC receipts (the amount or percentage is determined by the business owner and the funder)

• There are no fixed payments and no fixed re-payment term

 

What do you need to qualify?

Generally:

• Your business must accept credit/debit cards as a form of payment

• You need to be processing a minimum of $1,700.00 and above a month

• You can qualify even with poor personal or business credit

 

What paperwork is needed?

Generally:

• Completed and signed simple application

• 3 or more month’s credit card statements

• Bank statement

 

How long does it take?

Generally:

• Once your completed application has been received and processed (which can sometimes be done in as little as 1 day’s time), it takes 5-7 days for the funds to be forwarded and any subsequent fundings can be done in one-half the time.

 

So, as an example, a merchant whose business averages $20,000 a month in credit/debit card receivables, can get an advance of approximately $30,000 against its “future” receipts within 5 to 7 days after completion of the application and approval process.

 

These are easy lines of credit for merchants to establish and maintain – even for years – so that any extraordinary working capital needs they might encounter can be filled almost automatically without any disruption to a merchant’s already busy schedule.

 

The vast majority of the millions of new jobs created in the US in the last 15 years were created by the hundreds of thousands of small merchants and entrepreneurs that have fueled America’s economic growth. And, until now, small business’ funding and other needs have gone unaddressed.

 

As relates to funding, however, innovative private investors have seen this need of small business and have stepped in to lend a hand and help make the small merchant’s business grow and prosper while saving time and headaches.

 

These funders provide the funds a small business needs to realize its full potential and make its dreams become a reality and I, for one, am happy and excited to be a part of it!

 

Please call or contact me for a free, no-obligation business cash flow consultation at 225-247-4370 or dmaples@yourcashflowconnection.com. More details on other non-traditional funding tools can be found at my website, http://www.yourcashflowconnection.com.

 

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Tags: future credit card receipts, hospitality industry, leverage liquid asset, retail and internet merchants

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We have plenty of business, but what we really need is cash to run our business!”

Have you ever heard a frustrated business owner utter this remark? Or thought it yourself?

What would you say if I told you I could help you or that other frustrated business owner get that cash to keep that cash flowing in your business — keep your business up and going and running smoothly so that you can do what you do best — run your business?

Okay….got your attention?

Well, let me introduce you to a fast-growing source of cash for growth-oriented and cash-hungry small businesses — factoring of accounts receivable.

“So, what exactly IS factoring of accounts receivable?” you ask.

Factoring is the conversion of a company’s commercial accounts receivable into immediate cash by selling those accounts at a discount. With factoring you can get 70 to 80% of an invoice’s face value wire transferred into your account within 24 to 48 hours of the invoice being issued and approved. Pretty, useful, huh?

Better yet - factoring is not a loan! With factoring there is no interest to pay, nor principal to repay. No liability will appear on a company’s balance sheet due to its factoring. A company simply sells one of its assets (accounts receivable) for an agreed-upon “fee” to obtain a more liquid asset (cash) thus self-financing it’s own growth with debt-free funding. It’s equivalent to when you sell your vehicle (an asset) to someone — the two of you agree upon a price and the transaction is done!

Since factoring is not a “loan,” funding is not based on a company’s ability to repay the amount advanced. Rather, funding is based on the ability of the company’s customers to pay what is owed the company for the purchase of the company’s goods or services.

Unlike traditional funding sources which require all the assets a business has available for collateral on a credit line, factoring is, in essence, a Receivables-Based Credit Line, which needs no other collateral. It is available to be drawn on when and as needed. In fact, a business can conceivably have a credit line with its bank with its other assets as collateral and a second credit line with a factoring company with the receivables ONLY as collateral! Interesting…?

With factoring, you can have cash on demand to meet seasonal demands, accommodate new and larger clients who may demand longer terms or use up any excess working capital you have on hand. Factoring, in essence, gives you the option of offering terms to your customers thereby helping you to increase your customer base.

Prior to the 1980’s, factoring was used primarily in the garment, textile and furniture industries and was only otherwise available to “big business”. At that time (as with many things), the terms and prices were much different than what they are today.

Due to the increased competition and visibility of this very viable financial tool, however, these have changed for the better. The terms and prices we see today make factoring a quick and viable alternative funding tool for small businesses nationwide so that they, too, can take advantage of this proven, debt-free and flexible method to effectively multiply working capital.

SOME HIGHLIGHTS/ADVANTAGES TO FACTORING:

• No financials required — MUCH less paperwork than traditional sources (oftentimes this can be done by fax or email and no personal “appearance” is required by the business owner);

• Quick account setup - usually 5 business days (sometimes faster);

• Usually can have 70 to 80% of invoice amount wire transferred to your account within 48 hours after approved;

• No long-term contracts, you factor as much or little as needed;

 

Why don’t YOU make this a year of growth and increased profits by using this financial tool to enhance your business!

Please contact me for a free, no-obligation consultation at 225-247-4370 or dmaples@yourcashflowconnection.com. Please also see additional information on my website: www.yourcashflowconnection.com.

 

 

 

 

 

 

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The number one reason for business failure in the U.S. today is lack of working capital!

     Businesses need money to grow. A business cannot survive just because it has a better product, an exclusive market or the best method of distribution. The catalyst required for progress is money!

     But where does a business go when the banks say no?

 

Asset-Based Lending - What Is It and How Can It Help?

Asset-based lenders play a vital part in financing the economy and are dedicated to the growth and well-being of their clients. They provide their clients with cash by lending on fixed assets, accounts receivable and inventory, and engage in factoring, purchase order financing, real estate financing and leasing. They include the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, factoring organizations and financing subsidiaries of major industrial corporations.

The increased cash availability provided by asset-based lenders often makes the difference between profitable growth and failure for the undercapitalized business. The flexibility and cash flow availability they provide have enabled countless companies to grow and take advantage of market opportunities.

Asset-based lenders most often advance funds when traditional sources are not available. They are familiar with various types of businesses and are responsive to the individual client needs. Whereas, traditional sources, such as banks, usually have a one-size-fits-all attitude.

The phrases, “too small,” “too new,” and “not enough net worth,” do not deter asset-based funders. These lenders are “proactive” rather than “reactive” and can often help with creative structuring of deals to accomplish the goals and needs of their clients.

These lenders - large and small alike - possess the experience and know-how to structure the proper financing program for their borrowers and specialize in financing business transactions covering a broad range of products and services, both domestically and internationally. They understand the ins and outs of the specific industry they deal with. They have made a point of learning the industry and they have also made a point of thinking “outside the box” to accommodate the industry’s special needs.

Asset-based lending has always been available to “big business” but is just recently becoming utilized by small business. The business world has begun to realize that the total of “small business” is larger than “big business” and is beginning to work hard to make small business aware of these funding options.

Russell Handley, owner of Test Communications Group in Newburgh, NY installs cable lines for large cable companies. In his industry, it is standard for these firms to take as long as 90 days to pay bills. So Handley uses factoring (only one of the numerous types of asset-based lending - which is the sale of accounts receivable) on occasion and getting money quickly for his invoices allows him to take on more work. In fact, he credits factoring with having helped him increase his annual revenue from $500,000 seven years ago to nearly $4 million today. “We wouldn’t have grown as fast as we did without it,” he says.

(Pofeldt, Elaine. “Raising Capital.” Success May 1999.)

Phillip Brach, owner of World Trade Knitting Mills in Brooklyn, NY says, “When you call with a question, you don’t have to wait days and weeks for answers from the president and vice president,” he says. He also credits factoring with allowing him to increase his production and sale by about 25 percent in two years. (Pofeldt, Elaine. “Raising Capital.” Success May 1999.)

Some banks are actually beginning to send clients they reject to asset-based lenders. They have decided it is in their best interest to refer their business to someone who can help the client. Then, when the client grows to the point where he is bankable, they feel he will be inclined to stay with them and borrow from them.

The cost is influenced by the credit risk and collateral associated with the transaction. Again, no one-size-fits-all concept or mindset!

When evaluating an asset-based loan, borrowers should consider the cost of financing in the context of the benefits to be received rather than on the stand-alone basis. Compared with other financing alternatives, asset-based lending is very cost effective and efficient and is there “when” you need it to take advantage of profit opportunities in the market. Asset-based lenders are also responsive to the urgency of a businesses cash needs.

Some of the options available through asset-based lending are:

Accounts Receivable Factoring

Bankruptcy-Reorganization

Construction Funding

Credit Card Receipt Advances

Expansion Financing

Equipment Financing

Franchise Financing

Import and Export

Inventory Loans

Equipment Leasing

Purchase Order Financing

Real Estate Financing

Secured Credit Line

Unsecured Credit Line

Venture Capital

Royalty Funding

Debra Maples is a certified cash flow consultant who counsels companies and sometimes individuals on turning virtually every type of cash flow, income stream, debt instrument, or private paper asset into cash.

Debra’s specialties include:

• Solving cash flow problems with financing techniques banks don’t offer.

• Accounts Receivable factoring; Purchase Order and Contract Funding

• Business Note financing.

Debra is available to assist you with the structuring, purchase, or sale of real estate notes and any other negotiable paper instrument. She can be reached at (225) 247-4370. For additional information, see Debra’s website at www.yourcashflowconnection.com

 

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 Terms of the Cash Flow Industry

“A” credit customers: Consumers with impeccable credit, who can obtain a loan from traditional lenders.

Acceleration Clause: Language in a lease that secures payments for the full term of the lease.

Accounts Payable: The amount of money a company owes for goods and services it has received; any outstanding debt that a company has.

Accounts Receivable: A collection of a company’s outstanding invoices (invoices which have not yet been paid by the company’s customers).

Accounts Receivable Aging Report: A report showing how long invoices from each customer have been outstanding.

Advance Rate: The percentage of the face amount of an income stream that a funding source will advance to a client.

Amortization: The gradual, systematic payment of a debt, such as a mortgage or other loan, in installments of principal and interest for a definite time, so that at the end of that time, the debt will have been paid in full.

Articles of Incorporation: A document filed with a U.S. state by the founders of a corporation. After approving the articles, the state issues a Certificate of Incorporation; the two documents together become the Charter of Incorporation.

Asset: Anything having commercial or exchange value that is owned by a business, institution or individual. A business’ assets might include its real estate, equipment inventory, intellectual assets such as copyrights or trademarks, and accounts receivable.

Assignability: The ability to assign (or sell) an income stream to another individual or business.

Assignee: The person or business entity who is given, obtains, or buys the right to an asset.

Assignment: The transfer of the rights, title or interest of any debt instrument that is properly owned by another party.

Assignor: The person giving or selling an asset, and subsequently, forfeiting rights to that asset.

“B” through “D” credit customers: These consumers have less than perfect to bad credit and usually cannot qualify for traditional financing. Also called sub-prime credit customers.

Bad Debt: Any debt that is delinquent and has been written off as not collectable.

Balance sheet: A financial statement that shows a business’ current financial condition, with assets on the left side and liabilities and net worth on the right side.

Balloon: The balance of principal that is due and owing in its entirety at a specified point in time, but in any event, less than the time required to fully amortize the debt.

Bankruptcy: A state of insolvency of an individual or organization. The inability to pay debts.

Beneficiary: The person or party entitled to receive the benefits, or proceeds, of the life insurance policy upon the death of the insured person.

Bill of Lading: A shipping document which gives instructions to the company transporting the goods.

Bill of Sale: A document used to transfer the title of certain goods from seller to buyer.

Business-based income streams: Cash flow instruments that are paid to a business by another business or government.

Cash flow: The flow of cash through a business or household. In business terms, cash flow involves the flow of cash into a company in the form of revenues, and out of the company in the form of expenses.

Cash flow broker: Professional whose primary purpose is to unite income stream sellers with funding sources. They may operate as referral sources or as the primary liaison for cash flow transactions.

Cash flow industry: The buying, selling, and brokering of privately held debt in the secondary marketplace; the marketplace where businesses and individuals get help managing their cash flow needs.

Cash flow instrument: Future payment or series of payments. Also called a debt instrument or income stream.

Cash flow specialist: A cash flow professional who brokers cash flow transactions or buys cash flow instruments.

Cash flow transaction: Occurs whenever a funding source pays cash to an individual or business in exchange for an income stream.

Chattel mortgage: A mortgage on personal property, given to secure a debt. Typically used in the sale of a business. Also called a security agreement.

Collateral: Something of value (land, a home, a car, etc.) that is pledged as security to ensure the payment of a debt. Collateral is promised to a lender until a loan is repaid. If the borrower defaults, the lender has the right, by law, to seize the collateral.

Collateral-based income streams: Cash flow instruments that are secured by collateral.

Collectability: Refers to the funding source’s ability to collect future income stream payments once they are purchased.

Commission: Fee paid to a broker for executing or referring a cash flow transaction.

Consumer-based income streams: Cash flows in which the party that owes payments is a consumer, a private individual.

Contingency-based income streams: Cash flows in which the recipient is not necessarily legally entitled to receive payments, or in which the amount of the payment is uncertain or contingent upon outside factors.

Conversion: The process of converting a qualified prospect into an active client.

Corporation: A legal entity, chartered by a U.S. state or the federal government, and separate and distinct from the persons who own it. It is regarded by the courts as an artificial person; it may own property, incur debts, sue or be sued.

Creditor: One who is owed payments on a debt by a debtor.

Debt instrument: Future payment or series of payments, or a debt that one party owes to another party. Also known as income streams or cash flow instruments.

Debtor: One who owes something and makes payments to a creditor.

Default: The omission or failure to perform or fulfill a legal duty, obligation, or promise (i.e. to pay a debt).

Due diligence: Exhaustive research on a transaction, income stream, client, and/or payor. Due diligence may involve credit checks, appraisals, UCC searches, lien searches, or on-site visits with clients.

Equity: The value or interest an owner has in property over and above any indebtedness owed on the property.

Escrow: The system by which money documents, personal property, or real property is held in trust for another party by a disinterested third party until the terms and conditions of the escrow instructions are completed or terminated.

Face value: The current principal balance on an income stream.

Factor: A funding source that specializes in funding accounts receivable.

Factoring: The purchase of a business’ accounts receivable at a discount.

Fictitious name: A legal statement filed when a person uses a name other than his or her own to operate a business.

Foreclosure: A legal proceeding in court to seize property given as security for a debt that is in default.

Funding source: An individual investor or an investment company that buys income streams.

Government-based income streams: Cash flows paid by a government entity, either directly or through an insurance company.

Hypothecation: Borrowing funds from a lender, investing those funds in a debt instrument, and giving the lender a security interest in the debt instrument as the collateral for the loan.

Income stream: A future payment or series of payments, or a debt that one party owes to another party. Also known as a debt instrument or cash flow instrument.

Institutional lenders: Savings and loan associations, local and regional banks, mortgage companies, finance companies, and commercial lenders.

Insurance-based income streams: Cash flows stemming from insurance companies and paid to individuals or businesses.

Intangible personal property: Something that has value but is not a tangible asset, for example, a trademark, copyright, patent, or trade secret.

Investment-to-value ratio: A measure of how secure a creditor’s position is and how likely the creditor is to recoup all of his or her money in the event of a foreclosure.

Joint venture: A business entity established for a specific task, operation, or goal.

Lead: A piece of information of possible use in the search for a prospective client.

Leverage: The ratio of debt to total assets.

Limited liability company: A form of business structure designed to combine the best of corporate and partnership attributes into one entity.

Loan-to-value ratio: A measure of how heavily mortgaged a property is and how likely the owner is to default on his or her debts.

Marginal credit customers: Consumers who may have had some slow pay problems, but generally pay their bills.

Market value: The price at which a ready, willing, and informed person would buy something; the price property would command in the current market.

Marketing: The process of identifying and communicating with qualified prospects.

Master Broker: Individual who has been certified and designated by the American Cash Flow Association to work with Diversified Cash Flow Specialists.

Mortgage: A written instrument that creates a lien by pledging real property as security for a debt.

Notice of Pre-lien: A document notifying the owner of real property that materials or services are being furnished to his real property, putting him on notice that the one sending it will look to have a lien against the real property if those materials or services are not paid for.

Owner financing: A type of financing in which the seller of a tangible item accepts a promissory note as a portion of the purchase price. Also called seller financing.

Partnership: A common form of joint ownership of a business.

Payee: Person or business that has the right to receive a payment or series of payments and is interested in selling that income stream for cash. (Also called the seller or client.)

Payor: The person, company, or government responsible for making payments on an income stream.

Partial: Any part of a payment stream that is less than the full amount due.

Personal guaranty: A contractual agreement between a funding source and a seller, whereby the seller assumes personal responsibility and liability for the obligations of the income stream.

Portfolio: A group or package of income streams of the same type.

Privately held: Owed to a private individual or business rather than to a bank or other financial institution.

Profit and loss statement: A financial statement that shows a historical record of a business’ income and expenses.

Promissory note: A written promise to pay a specified amount to a specified party over a certain period of time.

Real property: Real estate.

Replevin: A legal proceeding in court to seize property (other than real estate) given as security for a debt that is in default.

Reserve: An amount a funding source holds in its account to cover potential payment defaults. After a certain time period has passed, the funding source rebates the reserve to the client less any fees or charges for delinquency. Also called a bad debt reserve.

Satisfaction: The discharge of an obligation by paying a party what is due (i.e., the satisfaction of an IRS lien or the satisfaction of a mortgage).

Seasoning: The length of time payments have been made on a note or other debt instrument.

Secondary market: The marketplace where individuals and businesses can sell privately held income streams to funding sources for cash.

Securitization: The bundling and resale of debt instruments to investors; permitted only for parties licensed and regulated by the SEC.

Security interest: An interest in property, other than real estate, which is given as security for a debt or other obligation. A security interest is created by execution of a security agreement and one or more financing statements under the Uniform Commercial Code.

Seller: The person or company that is holding a debt instrument and wants to sell it.

Servicing: The collection of payments of interest and principal, and trust fund items such as fire insurance, taxes, etc., on a note by the borrower in accordance with the terms of the note. Servicing by the lender also consists of operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquent loan follow-up and loan analysis.

Sole proprietorship: A business owned and operated by an individual.

Subordination: The act of a creditor acknowledging in writing that a debt due him or her by a debtor shall be inferior to the debt due another creditor by the same debtor.

Tail: The payment stream and/or balloon payment of an income stream subsequent to another party’s right and interest in the income stream. Usually the back half of the payment stream when another party has purchased the front half.

Tangible personal property: Personal property other than real estate, such as cars, boats, or other assets.

Time value of money: Concept that addresses the way the value of money changes over a period of time.

Title commitment: A commitment on the part of the insurer, once a title search has been conducted, to provide the proposed insured with a title insurance policy upon closing.

Title insurance: Title insurance can benefit either the payor or the payee. Should the beneficiary suffer any damages due to clouded or false title to real estate, title insurance recompenses the damaged party to the extent of the damages.

Title policy: An insurance policy that insures a party against loss due to a defective title.

Trial balance printout: A spreadsheet that lists all loans in a portfolio and their payment schedule. Usually required for a portfolio transaction.

Uniform Commercial Code (UCC): Standardized set of guidelines protected by law that set down how business transactions must be conducted.

Unseasoned: A lease or note that has had few, if any, payments made.

Viatical: The nature of viatical settlements is the assignment (transfer of life insurance benefits)and sale of a death benefit. In the beginning, viatical settlements were used primarily as a financial option for AIDS patients with a clearly terminal illness, who were unable to obtain the resources they need at a critical time, Eventually, victims of other terminal illnesses such as cancer and leukemia recognized the advantages of viating their life insurance policies to pay for current expenses.

 

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This is my first post on my new blog!

 I started about two months ago upgrading my outdated computer system on which I had previously started my first blog (www.debilbm/eblogs.com).  I quickly learned to be able to take advantage of a lot of the plugins and blog functions my old system needed to be upgraded — it couldn’t handle the newer technology.   It had been mostly used for email and a little websurfing previously.

 So, after lots of ado, I am finally to the point where I am ready to relaunch my blog with a new name and look as well as a better understanding of what blogging and the blogging community is about.  Granted, I am still a novice, but learning more each day and that I do enjoy blogging very much and am ready to get going again with it.

 So, please feel free to comment, share opinions, request information on a particular type of funding, etc.  I welcome feedback!

Adieu, Debra

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