Crestmark: Champions of Business Featured in Bloomberg Businessweek

Crestmark was recently recognized in Bloomberg for providing capital and financing solutions to businesses across the country as a non-traditional lender. The featured article outlines Crestmark’s unique efforts in adding value to small-and medium-sized businesses through innovative financial solutions to niche markets.

The article discusses how Crestmark’s diverse team has helped to expand and reach new locations and new industries. The combined experienced of our team, as well the leadership of CEO David Tull and President Mick Goik, allows us to continue to work every day to help clients meet their goals. Currently at Crestmark, we work to provide financing solutions to a number of industries including manufacturing, transportation, staffing, retail supply chain, insurance agencies, equipment finance/leasing hospitality, oil and gas. We have full-service offices including our headquarters in Troy, Michigan, leasing division in Bloomfield Hills, Michigan, Louisiana, Florida, Tennessee, California, and New York – as well as sales representation throughout the country.

Crestmark’s vision is to help businesses not be limited by funding. They want businesses who have good sales, strong capabilities and potential to succeed who may struggle with funding to be able to achieve success. We want to encourage entrepreneurs, small and medium businesses to have the funding necessary to grow their business.

See the full article here: http://www.crestmark.com/resources/champions-of-business-financing-across-the-country/

Our team works with an outside network of business professionals such as lawyers, accountants, business consultants, and bankers to provide the working capital assistance those businesses need. We are proud of our history and the collective strength that we’ve brought together – and we are ready to help. When you are looking for alternative financing for your business, and have questions, contact one of the Crestmark lending experts at 888-999-8050.

Using Stock Options to Build Your Team

As the economy continues to strengthen in 2015, demand for skilled employees continues to grow as well. Companies who are looking to hire top talent have to find creative ways to land (and retain) workers. This is especially true for young companies who are competing against larger, more established businesses who have deeper pockets to attract new hires.

Offering stock options can be a great way to build your employee base. Bill Harris, the founder of Personal Capital, said at a South by Southwest Interactive session in 2013 that stock options are the most powerful way to help build a successful business.

“The people you want to attract to your business are the people who want equity,” he says, according to Forbes. “You need people who are willing to take risks. And then you need to reward them.” For that, Harris says stock options are the “best little storehouse in Texas.”

“It’s great for the company since it’s got no cash outlay,” he explains. “For the employee, it’s even better. They benefit from the stock price rising and are protected from its dips.”

Harris says first-timers often struggle with equity because they don’t understand how to get the maximum value out of it. He suggests a one-year waiting period for new employees after which the stock options can vest monthly or annually. There are no hard and fast rules on who gets how many options, but he suggests executives or early hires can receive as much as 1-2% of the total shares of the company.

Harris also notes stock options can provide a benefit that no future investor could ever receive. “In startups, employees are often able to purchase exercisable shares by as big a discount of as much as 10 to 1,” he says. “In other words, if the preferred stock is a dollar, the common share and employee could be 10 cents.” When those shares start to gain value, the profits could be huge.

When done correctly, equity offerings can help spur employees to bet on an unproven or new company, reward long-term value creation, spur creative thinking by employees, and encourage employees to think about the company’s success beyond their own positions.

Andy Rachleff designed the Wealthfront Equity Plan to help companies figure out how to offer equity. Each year, he says, the company creates a pool that addresses four needs: New Hires (used to hire new employees at market levels), Promotion (used to reward employees that have been promoted), Outstanding Performance (used to reward the top 10% to 20% of employees who were exemplary in the past year), and Evergreen (used for all employees, starts at an employees 2½-year anniversary and continues every year thereafter).

The key, he says, is consistent, early evergreen grants. These grants, he says, are the most common area where tech startups fail to invest until it is far too late in their development.

“The average tenure for most technology employees is two to three years, and waiting until your first employees hit year four is just too late,” he says.

A transparent and consistent system of evergreen grants allows employees to build that system into their long-term expectations and links long-term tenure and contribution to their ownership stake.

Ultimately, finding a compensation package that allows you to attract and retain top talent is key in growing your business. Next time you are planning to hire, consider stock options as a part of your offer!

Crestmark Funding Solution Featured in ABF Journal

Steve Tomasello, Executive Vice President and East Division President at Crestmark, has written an article recently featured on ABF Journal. Steve has over 25 years of commercial finance experience and has been working at Crestmark since 2009. As an alternative lender Crestmark is often asked by traditional lenders, turnaround professionals and consultants to develop specialized funding solutions for businesses. We are always eager to share our insights and experience with other industry professionals and businesses.

In the article Steve shares Crestmark’s unique experience in finding a new financing solution for a busy thermoforming company. The challenging opportunity to develop a customized loan structure required innovative solutions and carefully timed, coordinated efforts by an experienced lending team. Twelve loans had to be refinanced, consisting of personal loans, mortgages, a line of credit and machinery and equipment term loans.

In the end the multi-tiered solution was made possible by strong leadership within the company, the resourceful and motivated sales, underwriting and management team at Crestmark, as well as a solid relationship with the incumbent lender. A new lending relationship was formed and innovations including improved management of controls, consistent processes, and higher-quality financial reporting to enhance the company’s overall productivity and potential were also achieved in the process.

For full details, read the article here: http://www.abfjournal.com/articles/unique-funding-solution-a-multi-tiered-approach-for-a-growing-company/

At Crestmark we have a broad experience in providing diverse financial solutions to growing businesses. Give us a call today to speak with a lending expert and explore options for your business.

The Five Cs of Credit

When the time comes to meet with a bank to consider whether or not you are eligible for a loan, there are five key factors that the bank will take into account in the process. These key factors are known as the 5 Cs of Credit and include Capital, Condition, Capacity, Collateral, and Character.  Each of these factors is evaluated by your lender and ultimately will determine whether or not you’re on the way to receiving your loan.

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Capital

When you meet with your lender, they will want to know that you are invested in the company both personally and financially. They will consider whether or not you have contributed any funds to the business, as well as, how personally invested you are in the business. Recognize that there is more to a loan than just showing you’re passionate about a project in order to get the loan.

Condition

This factor takes into consideration the level of risk your company has in the market. What are the local economic conditions that can affect the success of your business? In addition, they will factor in your relationships with vendors and customers, your competitive advantage and the overall industry landscape.

Capacity

This shows whether your business will have sufficient cash flow to repay the loan. The lender will take into consideration your payment history, cash flow, and determine the probability of repayment.

Collateral

When the lender reviews your assets and collateral, they want to ensure that the assets match the loan type and can support the loan if necessary.

Character

A lender can take into consideration all of the above factors, but a key component that could affect their decision is their personal experience with you. They’ll evaluate your references, your credit reports, and your overall professional demeanor.

Each of the factors plays a key role in determining whether or not you get the loan. It is important to find a lending partner that is reliable and trustworthy for your business loan. Crestmark is a trusted partner to companies in a variety of industries, providing the financing they need to help their business grow.

Check out the infographic to learn more about the 5 Cs of Credit and how Crestmark can help you through the process!

 

Borrowing Money vs. Equity

With the rise of popular television shows such as “Shark Tank” and “The Profit,” many new business owners are attracted to the idea of exchanging equity in their businesses in order to raise capital. This funding option is now commonplace – at least on TV – so it’s often a first thought in an entrepreneur’s mind when the need for capital arises.

But there is another option: borrowing money. Instead of giving up equity, some companies opt to borrow money, which has a few key advantages over giving up equity.

For starters, debt is typically less expensive than giving up equity in the long run because equity costs you a piece of your business.

“Think about it like this: when starting out, your small business needs inventory and equipment and to make payroll. Investors are going to help you with capital, but you’re sacrificing future profits indefinitely to fill a short to mid-term need,” writes Eyal Lifshitz on Entrepreneur. “With debt, you incur interest costs, but it is temporary and capped. Once you pay it back, your equity remains intact.”

Second, debt can be cheaper than your opportunity costs because you can profit from debt and open up new growth channels. The question, Lifshitz says, is this: “Is the return from this investment higher than the cost of the debt available to me?” Whenever the return is higher, the debt is worth it.

Third, paying interest on debt reduces your tax burden. The cost of interest actually reduces your taxable profit, which ultimately reduces your tax expense. The net result is that you’re paying lower effective interest than normal.

Finally, debt encourages discipline, particularly in the formative and growth years of a company, because it creates an environment of thriftiness throughout the business that could ultimately put the company on track for better margins.

Crestmark has broad experience in providing working capital solutions to growing businesses. If you are exploring options for your business, give us a call today to speak with a lending expert!

Tips on The Lending Process for Female-Owned Businesses

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If you’re a woman in the process of starting a new business, you’re in good company. The number of businesses owned by women in the U.S. is growing. In 2014, there were over nine million women-owned businesses, employing over seven million people and generating over 1.4 trillion dollars. For inspiration, check out this list of top women entrepreneurs.

This is great news, because it means women have the opportunity to pursue their dreams, support their families, and contribute to the positive growth of our economy – all on their own terms. If you’re in the process of getting started with a business of your own – whether you’re just bouncing ideas around or you have a firm business plan drafted – here are some quick tips on how to finance your new business.

Financing options and lending partners

It’s important to think through what kind of financing you’re going to need, both now and in the future as your business grows. Sometimes starting a business doesn’t require much money, and people can afford to finance it themselves.

But often, more money is needed to get off the ground and running. If you’ve thought it through and know you’re going to need a loan, consider what types of financing exist. A few examples include:

• Asset-based lending
• Account receivable lending
• Business Line of Credit
• Term Loans
• Factoring
• Traditional bank financing

The Small Business Administration (SBA) also provides some excellent resources to help women launch businesses, grow their existing business, and compete in the global marketplace.

Before meeting with potential lenders, have the following prepared:

– Business Plan: Having a firm grasp on what your company goals are, and precisely how you’ll reach them is critically important. Your business plan should outline these details, and will provide potential lenders with a thorough understanding of how you intend to run your business. Most importantly, preparing a good business plan provides you with an opportunity to demonstrate your professionalism, attention to detail, and ability to plan – all of which are important to potential lenders.

– Financial Documents: Once you’re moving forward and meeting with a potential lender for a loan, start prepping. Make sure all of your financial information is organized correctly and efficiently. Having the proper reports will help your lender understand your plans for the funding, how you plan to grow, and how you will eventually pay the loan back.
For more on what documents you will need and questions you might be asked, check out this previous post on our blog.

– Answers to FAQ’s: Be ready for questions the lender might ask you. From “Does the business control its inventory?” to “What is the future of the industry,” – have the answers ready. In order to prepare for this, share your business plan with a few colleagues and find out what questions they have. Chances are, they will be some of the same questions that a lender will be curious about as well.

We work with women to fund small-to-medium sized businesses and are experts in this area. If you have questions, or would like more personal advice on how to finance your business, give us a call today!

Small Business Lending Questions and Answers

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Here are some common questions that small business owners ask when preparing to find financing for their company:

Q: What documents will I need when applying for the loan?

A: Different lenders and types of financing may require slightly different documentation, but you’ll find the list is largely the same. According to the U.S. Small Business Administration, here’s a rundown of what you’ll need to have available when you apply for the loan..

– Personal background information, including previous addresses, former names, any criminal record, and educational background.

– Resumes, particularly if the loan is to help start a new business.

– Business plan, which all loan programs require alongside the application. This should include projected financial statements.

– Personal credit report, which you should obtain from all three major consumer credit rating agencies prior to submitting the application. Any inaccuracies or problems on your credit report will affect loan approval, so correct any inaccuracies before you apply.

– Income tax returns, as far back as three years.

– Financial statements, particularly for business owners with more than a 20% stake in the business.

– Bank statements, typically as far back as one year.

– Collateral, which varies greatly depending on the lender. Loans with greater risk factors may require significant collateral. Solid business plans and financial statements can show a business to be lower risk and can help alleviate the need for any collateral at all. Regardless, be prepared with documentation of collateral that you can offer.

– Legal documents, such as business licenses and registrations, rticles of incorporation, contract copies, franchise agreements, and commercial leases.

Q: What questions will a lender ask me?

A: Again, this varies depending on the lender, but, according to the SBA, the following are some standard questions for which you should be prepared,.

– Why are you applying for this loan?

– How will you use the loan proceeds?

– What assets do you need to purchase, and who are your suppliers?

– What business debt do you have, and who are your creditors?

– Who makes up your management team?

Q: What questions should I have for my potential lender?

A:

– What specific requirements does the bank have when applying for a loan, such as minimum credit score or cash flow?

– What are the rates and costs associated with this loan?

– Is the bank prepared to address my needs?

– What risks are there with regard to loan repayment? And how can these risks be managed?

– If I die, how will the loan be repaid? Will it affect my family?

– Does the loan have a prepayment penalty?

When you are looking for alternative financing for your business, and have questions, contact one of the Crestmark lending experts at 888-999-8050!

Class Is In Session – Employees to Benefit from Crestmark University

Crestmark launched an employee education initiative with a nationwide Pep Rally on January 7 that was kicked off by Crestmark Chairman/CEO Dave Tull. All Crestmark employees (including TIP Capital) were enrolled into Crestmark University, an online dynamic learning portal.

Crestmark University

Through this training platform, all Crestmark employees will have access to a library of more than 10,000 professional training videos and courses, including 300+ targeted videos on Crestmark’s policies and procedures. Courses are assigned throughout the year to employees and managers based on their roles and responsibilities within the company.

Some Crestmark University course examples include: Microsoft Office training in Word, Excel, and PowerPoint; compliance; business etiquette; supervision; teamwork; project and time management; and a full assortment of educational videos geared toward maintaining an effective and positive work environment.

“Crestmark University gives our employees the opportunity to learn more about their jobs as well as the jobs of others, and will lead to a broader understanding of how things work,” said Scot Lund, First Vice President, Director of Program Management, who leads the Crestmark University platform. “Over the next several years, we will be creating and adding to our internally prepared educational material. In addition to helping with training, recruiting, and retaining employees; this will set us apart from other lenders in our market, and we feel a more educated staff will further benefit our clients.”

The Benefits and Challenges of International Expansion

Many successful businesses in the U.S. turn their eyes overseas for new markets in which to grow their company, their client base and their finances. Some companies even take advantage of so-called “tax inversion” loopholes by merging with other companies and then moving their headquarters outside the U.S. in order to reduce their taxes.

Regardless of the method taken, businesses that traditionally deal solely in the U.S. can often faces challenges and hurdles when trying to expand abroad. The cultural differences alone can cause problems for some companies. But if you’re thinking of growing your business and expanding into different countries, be on the lookout for the following potential pitfalls and follow these tips to avoid them.

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1) Know your audience.

You could make a presentation to a client in the U.S., and that client could love what you’ve done and consider it a rousing success. But when you make that same presentation to an international client, it falls flat.

In this case, the problem is likely not with the presentation itself, but with the delivery. Be sure to edit your presentations and pitches to fit the local market to which you are presenting (Japan, China, Germany, etc.). You may need to adjust the content or format or even revamp the entire pitch if it does not fit the target audience.

Be sure to maximize your time, as well. American audiences typically prefer quicker pitches, while European clients likely want to absorb a presentation for longer than an hour.

Finally, one helpful tactic is to design a website for each market, rather than create a blanket international site for all overseas markets. This shows attention to detail to each market and would allow for easier communication to specific nations.

2) Emphasize your history.

You’re presenting your company and your product to a new market, but you aren’t completely starting from scratch. There are certainly financial, cultural and trend differences between the U.S. and international markets, but you should still be sure to emphasize the successes you have had domestically.

After all, you’ve reached the point of considering international expansion, so why hide from the success that brought you there in the first place? Just be sure to tailor your product or service to your new target audience.

3) Understand cultural differences in business relations.

Each market will have different cultural quirks that might go unnoticed but could hamper your efforts to expand abroad. For example, American businesses commonly give positive feedback on presentations, but that feedback might not amount to much in terms of making a deal. European clients, though, prefer to make presenters earn their praise, so take a statement of affirmation from a European businessman to heart.

4) Plan ahead.

International expansion can help grow your business, but it also requires funds to bring it to fruition. Legal fees, acquisition costs, marketing, advertising and new salaries are a few of the expenses necessary to spread your business abroad. Be sure to have enough money set aside to take care of these fees, and set limits for your business so that you have some left over to give yourself a head start once you debut internationally. This will allow you hit the ground running rather than having to work to regain the money you sank into the expansion.

International business expansion is a difficult process, but one that pays off if done properly. Be sure to prepare and execute properly in order to reap all the benefits possible.

How Much Is Enough to Borrow for Your Business?

When you’re struggling with meeting the financial demands of your business, you may need access to capital. Whether you’re a newer business or you’ve been established for quite some time, a shortage in cash flow can hinder your operations. It’s important to decide exactly how much you need to borrow when you’re worried about making payroll, securing supplies for an upcoming special project, or when you need to take care of unexpected equipment repairs. If you borrow too much, you’re spending more than you need to on interest and loan repayment and that’s money that you could be spending on other things. If you don’t borrow enough, you’ll be scrambling to cover your expenses.

Financial Planning and Review of Year End Reports

Here are some tips for narrowing down your budget to help you determine the amount of working capital you might need:

Forecasting Your Future

  • Use conservative estimates on leads, conversions, sales and profit margins.
  • Analyze previous monthly, quarterly and annual reports for a comparable estimate.
  • Learn your industry’s high and low seasons; not only when they happen, but why they happen.
  • Make projections for company growth, in both employee needs, equipment needs, and customer growth.
  • When you’re planning to borrow money for a new chapter in your company’s history, factor in the method, fees and interest associated with your financing.

New Businesses

If your business is young, it can be even more difficult to estimate how much you’ll need to handle growth. A common rule of thumb is to try to cover costs through the first six months of business, but it’s a good idea to build in a safety margin even above the 6-month mark.  Here are expense categories you should analyze:

  • Payroll – Add up the salaries and wages for yourself, your employees and anyone else doing work for your company. Include sales, human resources and seasonal help. Don’t forget the taxes and fees that must be paid to the government and to any associations.
  • Marketing and Collateral Expenses – Include the costs of signs and business cards, marketing materials, and product or service development.
  • Overhead – Estimate costs for your office and operations, including rent or mortgage, supplies, insurance plans and utilities, business licensure, vehicle registration and long-term equipment. Consider all of the necessities you’ll have to purchase, even furniture and computers.
  • Extra Expenses – Talk to someone experienced in your business or ask a mentor for advice. They would be a great resource for information about expenses, fees and pitfalls you may not have considered. Most business owners are willing to help with hints and experiences that will help other people avoid repeating their mistakes.

Established Businesses

If you’ve been in business for a while, you may be planning to expand your operations. If you want to get a loan or business line of credit, it’s important to organize your books and understand where all of your money is coming from and where it’s going. Ensure that you’ll have enough funding by making a list of your current and future expenses, as well as your sources of income.

  • Start with your routine expenses that are part of your monthly budget.
  • If you’re expanding, list any costs involved in additional personnel, equipment, office space and operating supplies.
  • For special projects, total the amount of capital needed to fund. Look at supplies, personnel, shipping and transportation.

Borrowing the right amount of money can help you grow your business without the aches and pain of overwhelming expenses. Once you’ve mapped out all of your costs and projected your income, you’ll have a better idea of how much you need to borrow. While there’s no exact science to estimating the right amount of financing, doing your homework will get you closer to a reasonable estimate.

Keep in mind that you don’t have to go through this process alone. The lending experts at Crestmark can work with you to determine the best solution. Give us a call today!