What Is Recapitalization Financing?

by Crestmark 12. September 2012 06:15

There are many different ways to fund a business. Starting out, you'll have the option to lean heavily on venture capital or similar investment vehicles, but you may also choose to finance through more traditional loans, or potentially even to self-finance. But as your business develops, you may discover that your initial financing method isn't the one that best suits your current needs. In this kind of situation, it'll be time to look at recapitalization financing.

The Funds You Need To Restructure

Recapitalization financing is, at its heart, a way of re-organizing the way the finances of your company are structured. This can mean consolidation, but it often means adapting payment structures to better fit your current method of production. For example, it could mean switching from a more debt-oriented structure to a line-of-credit oriented one.

Changing Your Business Capital

At Crestmark, we often help our clients transfer to lines of credit as their main source of business capital. We offer four main types of line of credit. The first is an asset-based line of credit, which is secured by inventory and/or receivables. Accounts receivable financing is another common choice. This kind of line of credit is secured purely by invoices with every invoice being considered individually. Finally, the last two common options are both types of invoice factoring. Factoring offers flexible financing that functions very similarly to a line of credit but is not technically considered one. Under an invoice factoring agreement Crestmark structures your funding facility based on accounts receivable/invoices. The invoices are purchased at a discount to provide immediate availability of funds to your company

If you're interested in learning how Crestmark can assist you with recapitalization, don't hesitate to contact us. We're always looking to help business owners looking for financial solutions. 

Funding New Opportunities With Accounts Receivable Financing

by Crestmark 4. April 2012 06:19

Accounts receivable financing is a simple concept. You start by providing a product or service to your customer. Then you bill them for what you provided. The service has been provided, but they haven't paid you yet. An outstanding invoice like this is a perfect candidate for accounts receivable financing. Rather than having to wait for the client to eventually pay you, you may be able to obtain cash from the invoice more quickly by working with a lender like Crestmark.

Why It Works For New, Big Clients

There are many applications where accounts receivable can shine, but it can be particularly valuable when your business experiences a sudden surge of growth, such as a new client. When you provide the first delivery of goods or services, it is often difficult to come up with the funding to handle the second and third under your current business conditions. Using accounts receivable financing allows you to bridge the gap between the funds your business has currently and what you expect to need for future orders.

A Non-Conventional Funding Alternative

Accounts receivable financing is a good opportunity for new businesses because it often has different requirements for approval when compared with bank products such as a traditional term loan. In this case, the main concern is how creditworthy your client is, not your business. For this reason, a lot of new firms use this to help them expand early on as they receive their first major orders.

Crestmark offers accounts receivable financing and other financial tools that can help when traditional bank loans don't meet your needs. Contact one of our lending experts today to learn about how we might be able to assist you with your business capital requirements. 

Acquisition Funding In A Rough Market

by Crestmark 14. March 2012 05:25

When economic times get tough, it's common to see the market panic. This is a natural response, expected by economists and demonstrated time and again in downturns throughout time. The average person – and in many cases the average business leader – holds tight to funds and hesitates on spending. This was clearly demonstrated in the most recent recession. However, shrewd investors may sometimes spy a worthwhile asset to grab at a steep discount during tough times. But how do you fund that kind of action in a tough market?

Look At Current Funding Options

In many cases, a good first step is to evaluate any lines of credit or other sources of funding that your business already has. In some cases, it may be possible to reorganize your current funds to free up additional capital for an acquisition or merger. In addition, taking a look at your current funds will further reinforce your decision to acquire or not. Businesses should never acquire without a thorough analysis of liquidity, especially in a time of financial difficulty.

Explore Additional Capital Sources

If your intended investment is a sound one and your company has additional resources that can be used to leverage further lines of credit safely, you should continue to search for additional lending options. Depending on your situation, Crestmark may be able to help you. To learn more, contact us and ask about our different acquisition funding options.

Remember, no matter how good you perceive an opportunity to be, ensure that your intended financial institution is reputable before you accept financing from them. Unfortunately, many finance companies failed in the last recession as capital markets became restricted. Don't risk your company simply because you believe that the merger is worth it. Research properly and only take loans from companies that have the proper backing, history, and security. 

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