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LENDING TYPES - COMMERCIAL FINANCING OPTIONS We are experts in financing small, medium, turnaround and emerging companies . . . FAST! These types of companies face unique challenges because established banks will not lend as much as you need and an equity investor is tough to find and typically very demanding. Anasta will help you get the cash you need to stabilize and expand your business through alternative non-bank funding. We have a broad network of fast acting lenders across the country. We can provide the following options – click to learn about each item – and give us a call if one interests you! Asset Based Lending Commercial Lines of Credit Factoring Financing Receivables Financing Term Loans Purchase Order Funding Commercial Real Estate Loans (coming soon)
Finance Working Capital – Get Greater Borrowing Power – Even If the Banks Think You’re Overleveraged! If your company has assets available to lend against but it is too leveraged for banks, ABL may provide even more borrowing power than traditional “cash flow” based bank products. Would your company benefit from asset based lending because it:
Asset-based lending typically requires a “security interest” in collateral with value such as
Your manufacturing, wholesaling, distribution, dealer, retail or service business should have annual sales of $1 million to $100 million OR total assets of at least $500,000. Because these loans are based on formulas, your company will need to show good management, professional bookkeeping (let us be the judge of that), auditable assets, and a business plan and revenue model that passes the sniff test. Usual advance ranges, terms, and costs
If you believe an asset based loan would benefit you, please click here for a worksheet to fill out and send us. Or, call us at 727-515-8095.
Factoring and Accounts Receivables Financing To Ensure Adequate Working Capital at ALL TIMES!!! Accounts Receivable If your company has too much money tied up in receivable terms (45, 60, 90 days) with customers, is profitable but occasionally gets tight on cash, has receivables (no other collateral will do) with fairly solid customers (must be business-to-business or business-to-government), then, your company should consider an on demand “credit line” (secured against A/R) that can be dipped into when needed. A/R financing is flexible, has simple applications, and is quick for approval. We can finance up to 90% of eligible receivables. Click here to view and print out a form for A/R lines. Upon submission, we can quote you rates. Factoring Factoring, on the other hand, is not a loan secured against an asset. Factoring is the sale of your receivables at a discount to the entity that advances you cash within 24 to 48 hours of invoice submission. Why consider factoring?
The process . . .
Cost . . . Factors will quote based on a number of variables including your monthly volume, customers’ creditworthiness, invoice sizes, payment cycles, etc. Miscellaneous costs include wire transfer fees and customer credit reports. Submit the short application and we will quote you some ranges. Click here to view and print. Lines of Credit
Amounts: $250,000 to $20 million Terms: 1 to 3 years Cash flow revolvers work better for companies that have shown stable cash flows throughout the entire year for the last few fiscal years. Pros: Less reporting than an asset-based revolver Higher interest rate - More covenants, that if broken, can increase fees or terminate loan - Loan size determined by multiple of EBITDA (earnings before interest, taxes, depreciation, amortization) (in senior position, could be 2x to 3x EBITDA) Asset-based revolvers work very well for companies that have cyclical or occasional negative cash flows. Pros:
Draw and payback as cash allows
May provide greater borrowing leverage than cash flow revolver since based on value of assets If you are interested in this type of financing, please fill out the form, send it in, and we will get back to you. Click here. Consumer Finance Help Your Customer Buy, Make that Sale! In essence, you are helping your customer find a credit source to make the purchase from your company – don’t think it is your customer’s responsibility to find a financing source. If the lender is familiar with your products or services and their ability to maintain value to “secure” the amounts advanced (unless personally guaranteed), then your company MUST give customers the option to use consumer finance contracts (i.e., basically, installment purchases). Typical constraints In new businesses, minimum monthly sales should be $10,000 per month or more. Profit margins should be 40% to 50%. Terms range from 12 to 60 months. If you are interested in this type of financing, please fill out the form, send it in, and we will get back to you. Click here. Purchase Order Financing Take those Large Orders with No Worries (yea, right)!! PO Financing can help companies that receive large orders from creditworthy end customers – don’t hold back your sales force for fear of large orders! You can finance the purchase or manufacture of specific pre-sold goods. The advanced cash is used to pay for the upfront materials and labor necessary to complete the order. Once your company produces, ships, and sends an invoice, the PO Funder will likely have a factor buyout its interest and see the transaction through to completion. With PO Financing, your company can secure payments to third party suppliers for finished goods that will ship directly to the end purchaser; pay job-specific suppliers for raw materials; pay for job-specific labor; and pay for packaging, shipping costs, duties, and inspections. PO Funders look at a business’s strength and performance; its ability to close the PO in less than 30 days; a profit margin able to pay PO funding costs; a transaction size of at least $40,000; quality and number of suppliers; and the strength of the existing factoring relationship. Alternatives to PO funding may be the use of Letters of Credit or Payment Assurance Letters insuring your vendors that they will be paid in a specific manner and in a timely fashion. This usually eases a vendor’s fears eliminating pre-payment and COD requirements and possibly extend payment terms. If you are interested in this type of financing, please fill out the form, send it in, and we will get back to you. Click here.
Structure them correctly, use Term Loans (greater than $200,000) to:
What are they? Term Loans are lump sum disbursements with payback lasting over a specific period of time. Be careful to structure the payback correctly to match cash flow cycles. Term lenders will look to ongoing sales and ability to collect while considering existing debt repayment obligations and other business needs. Short-term vs. Long-term Loans Consider the length of the loan needed. Long-term loans are typically used finance real estate purchases and improvements. Short-term loans can be as short as 90 to 120 days but typically last 3 years. Secured vs. Unsecured??? Term Loans can be secured or unsecured. Secured Loans are a promise to pay a debt which is "secured" with specific collateral of the debtor. For protection, the lender will match the type of collateral with the loan being made. The useful life of the collateral should exceed, or at least meet, the term of the loan; otherwise the lender's secured interest could be jeopardized. So, short-term assets such as receivables and inventory will not work as security for a long-term loan (see lines of credit for short term needs). Determining the value of collateral is an art in itself. There are basically 3 appraisal types: fair market value, orderly liquidation, and forced liquidation. Expect lenders to conservatively value the collateral (using the forced liquidation value) and loan only a percentage (70%) of its appraised value. Consider: If your business is a startup or lacks an operating history, both long and short term loans need to be secured with adequate collateral. Unsecured or cash flow loans typically start at around $1,000,000 up to well over $100,000,000. Generally, the borrowing company must be in business for a minimum of three years with good revenue and net income numbers confirmed by audited or reviewed financial statements. Until a business has a good established credit history, it cannot get an unsecured loan because of the business's risk. Interest Rates and Fees They are a function of the lender’s risk and can be fixed or variable. These are the loans that the Small Business Administration typically guarantees. Expect loan commitment fees and prepayment penalties. If you are interested in this type of financing, please fill out the form, send it in, and we will get back to you. Click here.
For Flexibility . . . So many companies use equipment leasing – because it is flexible and economical. Basically, the user (Lessee) agrees to pay a periodic rental fee to the owner of the equipment (Lessor) for use of the equipment.
Other Considerations Lessee can purchase equipment for $1.00, 10% of original cost purchase, or fair market value (talk with us about tax considerations). Terms range from 12 to 60 months. If you are interested in this type of financing, please fill out the form, send it in, and we will get back to you. Click here.
When You Want to Sell Your Business . . . Business Notes are typically used when a business owner sells a business and has to partially finance the sale. Why stick the business owner? Because it is difficult for a bank loan manager to justify the risk of purchasing a small business. Even a successful business can tank under new management So, sellers usually have no choice but to offer financing taking a sizable cash down payment and a promissory note for the balance. While a seller may be satisfied to receive the payments over 3, 5, or more years, more often, they have needs for the cash today or do not want the hassle of collecting payments. There are numerous reasons to take the cash upfront: college tuition, start a new project, take that dream vacation, or purchase something BIG. There are companies that will buy Business Notes. Expect the following criteria:
Of course, each transaction is different and each lender will have different criteria. If you are interested in this type of financing, please fill out the form, send it in, and we will get back to you. Click here. |
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