Did I Make A Bad Lending Decision

As with anyone sitting in the driver's seat of a lending company, there is always a cloud of worry looming. With any client, there always has to be a precaution taken with a deal. Experience only tells us that things can go south with any financing deal. The question we want to cover is, what makes us feel more comfortable in our own skin? Also, we will talk about handling an account we have worries about.

Your young hotshot sales guy just picked up a deal that seems to be paved in gold, great, where do we sign? Everything starts out great, excellent communication, easy verifications, but then something happens... It may not be the same case every time, but there is always a noticeable silence, an extended time between a payment, or something that raises a 'red flag'.

The flag has been raised, now where do we go in trying to get to the bottom of issue? Start with the facts - subtly ask your client if they know anything about a delay in payment, ask for a payment schedule, or just ask the status of a customer. The key is to tread lightly. Applying pressure to a  bruised fruit will only bring about problems.

After pursuing the previous avenue, and not having any luck, it is time to move on to the next step, the customer. Do some research on the internet, see if you can find any recent news about the company on the internet. Google has a great search to use for recent articles.

Check to see what that turns up, then you may have to move forward. At Lenders, we use multiple credit reporting agencies to see what customers are credit worthy. Commercial Credit Reports offers a great reporting, where they send changes in customer's AR, liens, finance updates, and banking updates, to keep us posted. I highly recommend this for a thorough report of a company's credit report.

The next step would to be to talk to your client. Discuss with them the current aging for the customer, ask about any issues they now of, etc. Escalate it to your client's credit manager, and ask about the payment experience from the last 60-90 days.

After getting all of the information you need, see if you can find some fresh trade and bank references. If you have a large exposure with that particular customer, we would recumbent asking for financial statements if the exposure is something to worry about.

Take all you have learned from this investigation, and get back with your client to share the info and discuss proper credit limits, and how to move forward with the customer in question.

Live Long and Factor!

Luke, I am Your Factor!

So Sometimes at work, my artistic side takes over, and decides to make cliche' comics from common sayings. It keeps me occupied.

If you have suggestions, let me know! My wit does not run on for eternity.

Your Patowan for procuring financing for your small business loan,

Mike

Another lovely Press Release for Lenders CF

Lenders Commercial Finance Announces Innovative Full-Cycle Financing

An Alternative to Traditional Financing/Factoring

Alamo, CA January 28, 2012:  Lenders Commercial Finance, an Asset-Based lending group in the San Francisco Bay Area, has announced the launch of their new Full-Cycle Financing Program.

The tight credit market has impacted countless small and mediums sized businesses that are experiencing cash flow problems. The lack of sufficient operating history and the financial resources to qualify for bank financing often becomes a critical issue for businesses in the SMB space.

Designed to help entrepreneurs overcome the limitations of traditional business loans, LCF loan programs can solve a number of business challenges - building out or acquiring the inventory needed to book and fill new orders, meeting outstanding obligations, bridging cash flow gaps, and paying off obligations that are a drag on businesses.

Full Cycle Financing covers 100% of the cost of getting product from the manufacturer to a buyers loading dock. Post delivery, additional funding up to 90% of the invoice is available, providing additional working capital. Invoices are paid into the LCF lockbox, and fees are deducted from the remaining 10% - the balance is then remitted to Lenders clients the next day.

Ken Wilkens, CEO, commented, “The concept is easy, start when you would like, and stop when it makes sense for your business. LCF provides reasonable terms, rapid turnaround, no hidden costs, and no long-term commitments. Our business model is built on honesty and simplicity for client and customer. ”

Lenders COO, Cal McGinnis, remarked: “We designed this program to help the small manufacturers, wholesale distributors, and service companies who drive American industry to establish working capital lines of credit that have become a difficult find in today’s commercial finance industry.”

#####

Lenders Commercial Finance was founded by a group of San Francisco Bay Area entrepreneurs to help other business owners resolve the same cash flow problems that they experienced in building a number of successful businesses. Lenders provides asset-based loan programs, accounts receivable financing, and equipment dealer flooring services. For more information, please visit: www.lenderscf.com

Asset-Based Lending Press Release

Come and get it! Read all about it!
Lenders is preparing to release a press release in the coming week.
It discusses our new Full-Cycle, commercial lending program, enjoy.

Lenders Commercial Finance Announces Their Full-Cycle Financing

The New Alternative to Traditional Factoring

Alamo, CA January 15, 2012:  Asset-Based lending group, Lenders Commercial Finance, announces the release of their new Full-Cycle Financing Program. Cal McGinnis, COO, stated: “At Lenders, we designed this program to help the small manufacturers, wholesale distributors, and service companies who drive American industry to establish working capital lines of credit that have become a difficult find in today’s commercial finance industry.”

Lenders can help clients build out or acquire the inventory they need to book and fill new orders. From port to port, warehouse-to-warehouse, their adaptable programs have many business plans covered.  After acquisition, LCF will fund a client’s firm purchase orders so they can get their product where a customer needs it, when they need it. Finally, Cash out; LCF will finance a business’ accounts receivable and provide the funding needed to take on new business. Other services are accounts receivable factoring (recourse and non-recourse,) and equipment dealer flooring for serial numbered product with short-term sales cycle.

The lack of sufficient operating history, or the financial resources to qualify for bank financing in today’s tight credit market can have a negative impact on business. Additional working capital to inject into client’s business will allow them to take advantage of opportunities to expand. Perhaps funds are needed to catch up with vendors or pay off other obligations that are a drag on businesses.

Lenders has changed the industry with up front, and honest programs. Their goal is not to lead clients into a financing program with hidden fees, or forcible contracts. Ken Wilkens, CEO, stated: “The concept is easy, start when you would like, and stop when it makes sense. LCF provides reasonable terms, with fast turnaround, no hidden costs, and no long-term commitments. Our business model was built on honesty and simplicity for client and customer, and that is what makes Lenders Commercial Finance different.”

Rather than dealing with a factor or a big bank, Lenders can make their business applicable in all parts of industry. Their commitment to success, and our supportive staff makes sure that their portfolio of business thrives. As a company that was started by entrepreneurs, they have experienced the same battles and successes of business, which is why Lenders Commercial Finance was started, by entrepreneurs for entrepreneurs. 

Make sure to visit Lenders Commercial Finance 

and see how we can help your business grow

Another one bites the dust

As anyone knows in sales, losing a sale is hard.

There was a client I had been corresponding with over the last month about getting some financing for his software company. Things seemed to be going well, but communication wasn't there. After weeks of slow correspondence, my skepticism was increasing.

Ready to close the deal after a few positive emails, a conference call was arranged for today. After discussing terms, and explaining how things would work with financing his business, the clouds parted, and it poured down on the Macy's Day Parade.

Our concepts of the deal were in different countries, and we ended the call with a hope to touch bases soon and get something that will fit his needs in the near future.

Well, where do you go from here? Your head may be in the gutter, but one has to remember that it is only one deal.

On average, for every five deals, four are bound to fall through. Keep your head up, and things will persevere. When trying to find deals, or make sales, you have to stay hungry, and stay fresh. The book outliers talks about becoming the best at something takes 10,000 hours, so keep trying.


So the deal of the day fell through, and I changed my heading for today. My day then went to contacting my brokers and contacts, trying to probe for new business. By the end of the day, I had spoken to three new potential clients, and am arranging for conference calls this coming week.

Just another example of persevering through tough times.


During the day a quote came to to mind:

"The Flurries of Defeat are Transcended by the Warmth of Success"

It came to mind, because I made it :)


Anyways, have a great weekend readers.

Live Long and Factor

iFinance - The benefits of a SmartPhone Business

Most ears have adapted to the subtle ding from our pocket, as another email is jammed into our inbox.
A quick glance to see if it has arrived from a work or personal account dictates the response. How drastically has mobile technology changed the daily workspace? Come one, you know as well as I do, it has changed it beyond recognition!

As I stopped by the Starbucks down the block from my office today, and was casually awaiting my holiday latte, I heard that charm that makes you check your phone, of course it was a work email. So as I stood amidst a cluttering and clanging pack of monkeys in suits, my response was sent.

Now having this technology is becoming both a curse, and a blessing. You have access to your email, work accounts, etc. anywhere you go. Sure it comes in handy, but I am still a believer in the thought process of never taking your work home. Once a person does that, it can make things stressful at the home-front. Whether it be taking time at the table to respond to a text or an email, the technology is also driving attention away from peer to peer activities. It's revolutionizing how we do not have to interact face to face anymore, and changing the structure of everything.

Since I was a kid, and got to hang on my father's coattails in his hectic life as a realtor, I always enjoyed the Mad Men style of business that went on. Exchange phone calls, emails, meetings, wine and dine, etc. It added a sense of the 'big time,' where every interaction and meeting gave a sense of accomplishment and satisfaction.

That is what I strive for in business, the feeling of accomplishment, and the classy sense of treating my clients well with any meeting or phone call. My generation cannot be responsible for the decrease in the cordial mannerisms of the business world.

How will the changing technologies affect our personal relationships in business?
I think the business loan industry is full of personal interactions that change everyday, and help me grow fond of the classic style of business.

That's a Big Twinkie...

Who ya Gonna Call? LCF!

Working Capital for the Working Man

Financial Fables dressed as Financial Rules of Thumb

A fun article that talks about financing fables...

1. Red cars are more expensive to insure.

You may also believe: If three people are photographed together, the one in the middle will die first.
Reality check: How much you pay for your insurance has absolutely nothing to do with the color of your car. It depends on the car you drive, your age, and your driving record.

2. Buying a home is always better than renting.

You may also believe : It’s bad luck to leave shoes upside down.
Reality check: During the last real estate run-up, this mantra was repeated ad nauseum. The truth is, sometimes paying rent may make a lot of sense. In exchange for that rent, you get a place to live without the commitment and costs that come with owning a home. For a lot of people, the added responsibility is more hassle than it’s worth.

3. Avoid adjustable-rate mortgages like the plague.

You may also believe: If you swallow a watermelon seed, a watermelon will grow in your stomach.
Reality check: If you’re absolutely positive you’ll only live in your house for a short time, an adjustable-rate mortgage (ARM) may save you money – even when rates are rising. This is especially true for hybrid ARMs, where the loan’s interest rate may remain fixed for, say, three or five years before readjusting.

4. When planning for retirement, assume annual stock market returns of 8 percent.

You may also believe: A cow lifting its tail is a sure sign that rain is coming. (Well, it’s a sure signsomething’s coming.)
Reality check: Between 1981 and 1998, when the stock market was averaging annual returns of almost 13 percent, this figure seemed conservative. Since then, the stock market has seen the bursting of the dot-com bubble, followed by a second crash in 2008, and the drop we’re even now enduring. According to some experts, the stock market may return as little as 4.5 percent annually going forward.

5. To determine the percentage of stocks you should have in your portfolio, subtract your age from 100.

You may also believe: Placing a bed facing north-south brings misfortune.
Reality check: According to CNN Money, because of longer life expectancies, this number may not be aggressive enough. Instead they recommend subtracting your age from 110, or even 120.

6. Never buy a house that costs more than three times your annual income.

You may also believe: Any ship that sails on Friday will have bad luck.
Reality check: When I bought my last house in 1997, I paid roughly four times my annual income. It was tough for a while, but not impossible by any stretch. A broader, but much better, benchmark to follow is to make sure the ratio of all of your monthly debt payments to your gross monthly income does not exceed 36 percent.

7. You should close any credit accounts you no longer use.

You may also believe : Dreaming of a lizard is a sure sign that you have a secret enemy.
Reality check: Credit card companies see long-held accounts – especially those lacking negative reports – as proof of credit responsibility. Because a portion of your credit score is determined by your borrowing history, as well as the ratio between the balances on those cards and your total available credit, it’s often wiser to keep your unused credit accounts open.

8. When planning for retirement, anticipate replacing 80 percent of your pre-retirement income.

You may also believe : The spouse who falls asleep first on their wedding day will also be the first to die.
Reality check: The problem with this rule of thumb is that it assumes expenses will stay the same in retirement, when for most people, nothing could be further from the truth. For example, kids move away, and people may pay off their mortgage and/or downsize to a smaller home. For many reasons many retirees will spend far less than they did in their working years.

9. To quickly figure a server’s tip, double the first digit of the bill’s total. If the bill is $100 or more, double the first two digits.

You may also believe : If you say goodbye to a friend on a bridge, you’ll never see each other again.
Reality check: The standard tip for good restaurant service has been 15 percent for decades. Well, that’s until tip inflation once again reared its ugly head. If you’re not careful, following this rule could result in an overly generous tip.

10. Your minimum net worth at any given age should be your age multiplied by your pre-tax annual income, with the result divided by 10.

You may also believe : Salty soup is a sign that the cook is in love.
Reality check: Never mind that this formula has many flaws. Net worth is just a snapshot in time that serves very little purpose, unless you plan on liquidating all your assets. In fact, in the grand scheme of things, the annual change in one’s net worth is a much more important indicator of financial health. Yes, folks, even more important than an itchy palm.

View this article on MoneyTalksNews.com

Smart Investing
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Lenders Commercial Finance

By Len Penzo | Money Talks News – Tue, Nov 6, 2012 1:43 AM EST







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Invoice Discounting with Lenders Commercial Finance

How does Invoice Discounting with Lenders Commercial Finance differ from other business financing arrangements?

Unlike traditional bank financing (where the focus is on clearing very specific financial hurdles), the focus with Invoice Discounting is the strength of your business model and the creditworthiness of your buyers.

Unlike traditional accounts receivable factoring where the factor takes over your accounts receivable, with Invoice Discounting by Lenders Commercial Finance you remain in control of your customer relationships.

How does Invoice Discounting work?

Once we establish an “Invoice Discounting Line Of Credit” for your company we partner with you in establishing Invoice Discounting Limits for each of your buyers. You submit the invoices you wish to finance via our secure internet-based invoice management system. Invoices representing goods that have been delivered or work that has been completed are funded within 24 hours by wire to your account.

How much do I receive for my discounted invoices?

We typically advance 90% of the net invoice amount up front and the balance when the invoice is collected.

Do I have to discount all my invoices?

No. We want to give you as much flexibility as possible in managing your cash flow. Not all buyers need to be discounted. You can hold invoices on buyers approved for discounting up to 10 days after delivery of goods (or work completion).

Can I payoff discounted invoices before they are collected?

Yes. You can “buy back” all or any part of your discounted invoices at any time and for any reason.

Is it expensive to discount my invoices?

We take a normal trade discount when you receive funding (typically 1% for each 10 days on original credit terms). Invoices that pay beyond terms are charged a convenient daily rate. The cost is higher than with bank financing but is in line with industry accepted trade discounts and discounts paid on credit card transactions.

Are charges based on the total invoice value or on the amount advanced?

With Lenders Commercial Finance all charges are based on the actual amount advanced to you. Other than pass-through wiring fees, there are no hidden fees or add-on costs as with most other financing programs.

Who is a good candidate for a Lenders Commercial Finance line of credit?

If you are a small or mid-market business (SMB) with B2B trade A/R you can use your assets to qualify with LCF. You can generate funding now to grow your business, pay down other loans or obligations, and to take advantage of new business opportunities. 

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Make sure to use Mail Chimp for your online Marketing, you'll go bananas.

Finding Capital

Finding Capital

Understanding Asset-Based Lending

For businesses seeking working capital to run their operations effectively and to finance growth, asset-based lending may be an excellent solution.

In its simplest form, asset0based lending involved a loan or line of credit secured by business assets under which the financial institution will advance funds based on a formula. The formula is usually a percentage of the current value of the  eligible assets. The assets usually consist of the borrower's accounts receivable and inventory, but sometimes other assets may be used. The advance percentage will depend on the assets being pledged. For accounts receivable and inventory, the percentage will typically range between 75 to 85 percent and 25 to 60 percent, respectively, and each is subject to certain eligibility criteria. A lender will usually conduct periodic audits to determine the  current value and eligibility of the assets. In addition, borrowers typically are required to provide a lender with various reports, such as accounts receivable agings and inventory valuations.

 Asset-based lending typically provides a low interest rate and favorable repayment terms. For the most part, asset-based lending is typically structured as a revolving line of credit that businesses can draw upon when needed, allowing them to avoid making fixed payments of principal and interest and incurring unnecessary interest. Because of the nature of asset-based lending, business usually use such loans for day-to-day cash flow needs rather than for purchases with a set dollar amount, such as equipment or other property.

It is important to bear in mind that a business must maintain the value and eligibility of each asset to ensure that it remains available for financing under the advance formula. For example, in the case of accounts receivable, the receivables in an account which remain unpaid after a certain period become ineligible for financing.

"Borrowers also need to make sure they are getting the maximum amount of advance they can get on the asset," says Barry Sloane, CEO of Newtek, a company that provides business services to small and medium-sized companies throughout the United States. "They should be aware of market rates or consult with an a experienced adviser."

Most small or medium-sized businesses can benefit from asset-based lending as long as they have appropriate assets to secure the loan or line of credit. Before approaching al lending institution, business should be prepared to provide two to three years of financial statement as well as business projections for the next tow to three years. It is recommended that a business also hire legal counsel with experience in asset- based lending to assist in negotiating the terms and structure of the transaction. Obtaining financing typically takes about 45 to 60 days, so businesses should apply to their financial institution as soon as they know they are going to need it.

Aset-based lending can be an effective tool for a growing business.

"The most important aspects for the borrower are negotiating the advance and the interest rates," he says. "OTher than that, the most important thing is making sure the asset is not impaired."

This article was supplied by City National Bank

Be sure to ask us about your Accounts Receivable Financing

The Factoring "Lock Box"

As the eyes and ears for a Factoring/Financing company, it is interesting to be involved and surrounded by new terminology, as it is in any industry.

My quandary today was, when involved in a conference call, describing a factoring "lock box" through the financing bank.

Here was the dilemma:
This certain company is working on a contract with us involving buying their accounts receivable. The clients were worried that their customers would know they would be going through a secondary finance company, that is fronting them money.

Here is where I would like to interject. Factoring happens to be one of the oldest and most basic forms of getting financing outside of a bank. It has been used for centuries, if it were not for factoring, there would not be clothing on your back, because that is how the garment industries were started. It is a widely known, and widely used option to small and large business owners. Try to find an industry that is retail or sells a good that does not use some sort of commercial financing or factoring. So in summation to my soap box rant, there should not be any worries about someone knowing that you have a factor buying your receivables.

Back to the story...

As we were in the midst of this conference call, my superior was trying to explain this fraud deterring system called a "lock box." If you are in the industry, you would know that one of the 4 most common forms of fraud that is committed is when a client does not submit, or notify the factoring company of an invoice that the creditor had already purchased.

My superior did an excellent job to avoiding the "F" word, (keep your mind out of the gutter, I mean fraud,) and told them how that it is merely a process to show verification to us and the bank that your checks are coming through and that the money you had promised is not being lost in translation.

To put it shortly, a "lock box," is a system that all checks are placed into, a photo is taken, and so that all parties involved can see what and where money is being handled, and sent to, as a safety precaution for the money that is being loaned.

I would advise doing a google search and finding websites such as:

http://www.investopedia.com/

or

http://money.cnn.com/services/glossary/a.html

to learn some new vocabulary, and find a new word of the day.



Factor ya later!

http://www.lenderscf.com
Asset-Based Loans to Grow By

Talking about, thinking about, and understanding the life of a hybrid Finance/Factoring Company

This blog will let people understand and begin to comprehend the other side of financing and factoring, where you are dealing with real people, and not just a bank.

A little about our company, and the men that started it:

Steve Tarpley and Ken Wilkens have started three successful small businesses over the last 21 years. They founded NEWCAL Industries in 1991, and grew it into one of the top ten office equipment dealers in the nation. In 2008 NEWCAL was acquired by one of the world's largest office equipment manufacturers.

Steve and Ken understand small business - they are intimately familiar with both the joys and challenges of building and managing a successful business. There were many stages along their path to success that required creative ways to fund growth.

Discounting their commercial invoices was one of the tools they utilized while building their businesses. It helped them hit some of their major milestones. They formed Lenders Commercial Finance to help other small and emerging California businesses fund expansions & growth, bringing Cal McGinnis on board to run their day to day operations. Cal has over 30 years of experience working with small businesses; both as a commercial banker and as a trade credit specialist.

You too can take advantage of this important tool to unlock the cash flow tied up in your accounts receivable. Invoice discounting with LCF works much like an accounts receivable “payment-in-kind” bank line of credit. Collections pay down your line and new invoices allow you to draw upon your line. Our goals are to help you obtain the working capital you need, when you need it.

http://www.lenderscf.com