What Type of Lender is Right for My Business?

by Crestmark 10. July 2014 05:54

When business owners or executives first realize the need for working capital, it can be difficult to know where to start. People often ask, “Should I call my local bank? What about non-traditional lenders? What’s the difference between the two?” We hear this all the time, and wanted to provide a resource to help! 

We recently released an Infographic titled “What Type of Lender is Right for My Business?” This provides a quick and easy reference piece for prospective borrowers to determine whether they’d be better suited pursuing a traditional bank line of credit, or to look into alternative financing. Each lending option has unique characteristics, and this infographic helps clarify how different business situations are best suited for certain lending options. 

The infographic follows a flow-chart format, and leads users through a series of yes / no choices about their business. Key points that determine the right fit include: 

- Does your business have three or more years of positive business history?

- Do you have limited or negative equity?

- Do you have limited or inconsistent profitability?

- Do your assets exceed your liabilities?

- Does your business have positive trends?

- Are there opportunities for growth?

By answering each of these questions, it’s easy to see whether your business may qualify for traditional or non-traditional lending. We are excited about this release, and hope that many businesses find this useful! 

              is alternate lending right for my business

Are you in the market for a business loan? If so, ask yourself the questions on this infographic and then give us a call to discuss! We’d love to help walk you through the process of figuring out what lending option would be best for you and your business. 

 

 

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Business

Crestmark Featured in 'The Secured Lender' Magazine

by Crestmark 2. June 2014 12:39

Asset-based lending and staffing agencies make good business partners. It's something that we've known at Crestmark for quite some time. The Commercial Finance Association's "The Secured Lender" magazine recently featured Crestmark's West Division President, Pat Haney, and East Division President, Steve Tomasello, in an in-depth look at how and why staffing agencies and asset-based lending companies are a good fit for each other. 

In short, the article "Perfect Partners" explains how asset-based lending companies like Crestmark are able to understand, work with and scale to the long-term needs of clients like staffing agencies that are in a position to grow quickly. While their financial outlooks are promising, staffing agencies have needs that can't be met by traditional lenders and standard bank loans. 

crestmark in secured lender

"Staffing's only going to grow. It's the second-largest segment in our portfolio, and we only see that continuing in the future," Tomasello explained in the article.

In select industries, companies are hiring workers, but only on a temporary basis at the moment. That means they need the flexibility of staffing agencies that can handle the recruiting and screening process until this growth becomes more permanent. Staffing agencies don't always meet the requirements of traditional lenders, making asset-based lenders ideal partners for meeting the rapidly rising costs of financing payroll, insurance, taxes and other related expenses.  

"Strong cash flow is imperative for the staffing industry," said Haney. "Without it, they may get so far behind on tax payments that they go out of business."

Both the staffing agency and the lender need to understand how the other company works, especially when it comes to the lag time between when the employee is paid by the agency and when the agency is paid by its client company.

As with all successful relationships, communication, patience and flexibility are key factors in making the partnership beneficial to both the lender and the borrower.

Want to see the full article in "The Secured Lender" magazine? Read "Perfect Partners" here.

 

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Asset Based Loans

Three Ways To Cover Payroll Funding

by Crestmark 8. October 2012 10:03

Payroll funding can be one of the biggest financial obligations that your business faces. Depending on your size and your industry, payroll financing may be one of your biggest expenses alongside materials. But how do you cover it? And what can you do if your staff frequently changes? The answer may be a line of credit. There are three major types that offer the flexible kind of funding that works best for payroll.

Accounts Receivable Financing

A/R financing, also known as a ledgered line of credit, is a flexible option that works for a wide variety of businesses. Every invoice you issue is recorded and funding is issued based on that. This structure means that it's a highly adaptable form of credit, but it also means that it can exactly match your current needs. As you issue more invoices, you're going to need to spend more to finance them – and accounts receivable financing provides the funds you need.

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.

Asset Based Lending

This form of line of credit is secured based on inventory, invoices, or a combination of the two. The amount available through a line of credit varies according to how much inventory is owned or how many invoices are issued. The main difference between asset-based lending and accounts receivable financing is how much funding is issued. With ABL, assets (including invoices) are reported in batches, whereas accounts receivable financing will involve submitting each invoice individually. 

Is It Important To Find A Finance Company That Specializes In Your Industry?

by Crestmark 23. May 2012 12:19

Are all factoring companies equally capable of financing every deal? From the perspective of someone seeking credit for your business, it can be tempting to knock on the door of every bank and non-traditional lender in your area and online. But is it really better to work with anyone who will give you the kind of loan you need?

Your Field Is Unique

Immersed in the daily reality of life in your industry, it's easy to lose perspective on just how unique your business really is. The flow of revenue for the transportation industry – punctuated by delays, spiking gas prices, and lag time between payments – is very different from the expected pattern in a staffing agency, which in turn is different from a retail business. Because non-traditional lenders are often relying on these patterns to provide financing, it's vital that they have an understanding of what to expect. Your explanations may not tell them what they need to know.

A Specialized Company Has Custom Solutions Ready To Go

Many fields have developed specific lending practices that are unique within that industry. For example, trucking has freight bill financing and fuel cards. Government contract financing has to understand the additional paperwork and disclosure requirements that are necessary when working with federal or state organizations. A company that has worked with your field before knows what to expect and has already created unique solutions that are designed specifically to meet your needs. You just won't find that level of service in factoring companies that don't know your business.

Crestmark has always been proud of our customized offerings for fields like staffing, manufacturing, transportation, apparel, and government contracting. Even when we don't have prior experience in your field (a rarity considering the diversity of our staff and years of lending across industries) we know the questions to ask in order to provide you with the right non-traditional lending tools for your needs. 

Alternatives To Term Loans

by Crestmark 8. May 2012 04:57

There are a number of reasons why a company may not want to take a term loan. They may want to pledge personal collateral, find it difficult to obtain this more traditional form of financing, they may simply not want to accept the terms that are available, or they may simply prefer these non-traditional financing options as a way to meet their financing needs. Whatever your situation, if you're looking outside the term loan box, you should look at these potential solutions.

Accounts Receivable Financing

A/R financing is a flexible line of credit solution available to most businesses. This type of financing leverages the money you are due to receive from invoices you have sent to your customers. A/R financing helps bridge the gap between your cost of sales  and when you get paid for your goods or services.

Asset Based Lending

This line of credit is secured by an asset that your business currently holds. Asset based lending is a line of credit, meaning that you can use as much or as little of your potential credit as you select up to the value of the collateral pledged. You can change it monthly, weekly, or even daily depending on your needs.

Factoring

In this type of financing, a third party factor actually purchases your unpaid invoices. You receive a portion of the value upfront, with the rest of it being delivered, less an administrative fee, when your client makes good on the debt. Factoring may be traditional, where the factor fully purchases the invoice and assumes both the credit risk and responsibility for collection of the receivable. Or  on a recourse basis where the receivable is sold back to the seller after a certain period of time elapses. Unlike other types of financing there are less restrictive covenants inherent in factoring transactions.

 


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