Business Brokers create less need for a Sales Force

We pride ourselves in the bonds we grow with our clients, and the brokers that represent us with prospects. A key to a successful business relationship is friendly, courteous, and professional communication. In the financing industry there are deals that work, and there are deals that do not work, it is plain and simple.

Brokers are the lifeblood of our business. With constant communication and information exchanges, you can extend your salesforce exponentially. They may not be on our payroll, but they still have the broker fees that make up for not being connected to a financing business. These business relationships are what make business exciting. Every day there are new, and exciting deals that are pushed forward by the bridge builders. Working in the industry you get to see how businesses are developed, built, thrive, fail, stumble, and recover. It really opens up your eyes, and gives a valuable lesson in the business realm.

That being said, check out our friend Tom Dewell's blog, Alternative Commercial Finance , to learn more about his side of the business, learn some tips, and see another side of the coin in the finance world.

Lenders Commercial Finance: Your Answer to Factoring Loans

Eye of the Financier, my rocky comic

As any day goes by, a mind tends to wonder. Whether it be about what the plans are for the evening, the cadre of things you forgot to do at work, or in my case, what to blog about next. Writing an article about every good and bad thing that happens in an industry can become monotonous, tiring, and blatantly bland. With this thought in my mind, how do we change up a seemingly bland industry? My artistic side kicked me in the shin and said, 'hey, let's make popular cliche' movie lines into comics.' Thus my new blogging idea has sprouted; to take the most famous movie quotes, and turn them into cheesy, corny, and humorous one still frame comics.

So in the next couple of weeks, try to enjoy the dry humor I have, and if you're in the industry, maybe some of the themes will ring true. Make sure to drop a line, tell me what you think, and I'll be more than glad to comment back.

To start off, my homage to Sylvester Stallone in Rocky, with his famous line: "Yo Adrian, I did it!"

Earlier this year, as part of my bucket list tour, and since I am from Pennsylvania, I took a trip down to Philadelphia with my running buddy, and we did a 7 mile trek to the Philadelphia Art Museum, and climbed the legendary steps. It was a gorgeous October Sunday, the air was crisp, the streets were not overly crowded, and we had a plan. After scouring running blogs, and checking for signs of the route that Sly ran in the movie, I came across a remote map that wasn't completely accurate, but a good start. Panning through the training scene I found a couple of more roads. We started on the south side of Philly, 16th Street I believe, ran through the capital building, past the Rodin exhibit, through the Czech parade that was going past the museum. A perfect run, a great time, and an experience, I care to never forget. One of those cheesy moments in your life that will always make you smile.

With that being said, enjoy.

The Fine Line Between Luck and Hard Work

As a member of a family that has many entrepreneurs, I have wondered for many years, is success yielded from pure luck, or hard work? Many people that have discussed this topic claim it can be all of one or a happy mix of the two.

The reason behind this topic comes from watching the Ironman Triathlon in Kona, Hawaii. This race is the world's most physically taxing race. It starts with a 2.5 mile swim through wind gusts and ripping waves, followed by a taxing 112 mile bike ride. The crowning gem to the race is the 26.2 mile marathon to finish off the race, where many fail, and some succeed.

Sure, it takes a lot of physical preparation for the race, but no matter how determined you are, sometimes luck runs out, and things happen. A racer could get a flat tire, a cramp in an arm while swimming, a random case of shin splints. A minor stroke of bad luck can sideline a racer. Then there is the determination side of it. If you want to do it, maybe you will get lucky enough to break the pane of the finish line into a gratifying finish.

This is the rub. No matter how hard you work all of your life, maybe you will not become a millionaire, but maybe if you work your fingers to the bone, a spark is ignited, and an idea is born. Then your nurture the idea into a business, and call it a success. Maybe it wasn't worth millions, but maybe you have a good life, and something to give to your kids, that is personally worth millions.

At what point do we call it a stroke of good luck, or when do we begin to call it hard work and dedication?


As a big runner, and fan of alternative sports like triathlons, fun runs, and most extreme sports, I think it is a big personal gain to set a goal for yourself like a couch to 5k, get involved in local sports, or just join a gym. The experiences people will share, and the opportunities that are laid out in front of you can be the just the change you are looking for.

Let Lenders Commercial Finance help you with your next big goal in life. Our asset based lending can help make the dream, a reality



<a href="http://www.99trader.com/">99trader.com</a>

Dave Matthews Band - Grey Street (Live at The Gorge)

It was one of those days... On Grey Street!

The Weight of a Personal Guarantee

The weight of a personal guarantee, what does it hold anymore?

My Associates and I sat pondering this today, after a potential client called in. His dilemma was simple; he needed about $300k of Accounts Receivable Financing for his business, and conveniently, he called Lenders Commercial Finance.

We have been discussing doing asset-based lending with companies like this recently. These are the new trend of web-based businesses, that are doing either advertising, marketing, SEO, or what seems to be a limitless list of options. Our dilemma is this: We have a company that has a Pro Forma that is almost unbelievable, or is it? If you can simply find build a market share for someone on the internet, or gets traffic directed to adds, and continue to expand the horizons of that business, it is believable.

The problem with some financiers today, is that they are on the uphill side of the technology curve. Their experience was on pen and paper, or a typewriter, and they cannot wrap their arms around a concept of a webpage making a huge amount of money. Fortunately, we at Lenders Commercial Finance, are not on that learning side of the curve. We have a very informative and educated staff, where we share ideas, create ideas, and sift through other's ideas, to make profitable business decisions.

Our big point at hand in this article, is the fact that we are discussing ideas of financing online businesses, and with this idea, we need things like a personal guarantee to back up our decision to finance them. So if you are looking for a chunk of financing, with a somewhat "exponentially profitable" business, why can you not offer us a personal guarantee?

It reminds me of the days when a handshake sealed a deal over cocktails and a meal. Now paperwork, credit checks, and a cadre of other pre-requisites are needed to have anything be finalized. If you are blazing trails for an entrepreneurial business, there shouldn't be a reason that you, the person on this venture, wouldn't back it whole-heartedly.

What does a personal guarantee stand for anymore? Does it say, yes, I am a businessman, and my life and soul is this business, or does it say: sure I'll agree to whatever you would like, as long as you just hand me that check?

As Bob Dylan said, Times They are a Changin'

Since we are closing in on Thanksgiving, I thought I would throw this out for fun.

How Many Calories Will We Really Eat On Thanksgiving Day?

November 19, 2012 By Mary Beth Quirk

The diet always starts the day after Thanksgiving, right? Because we know that every year, we’re going to stuff a large amount of fowl, potatoes, pies, dressing, rollscakesgreenbeancasserolewhippedcream etc. into our stomachs until it feels like the universe will explode into a huge, gravy-covered mess. Part of our collective overeating shame could be tied to the oft-cited statistic that the average person will eat more than 4,500 calories on Thanksgiving Day. But is that really how much we’ll ingest?

The New York Times wanted to get to the bottom of that astronomically high number which is inked back to the Calorie Control Council, the people who represent diet food companies) to make sure we’re not feeling guilty and claiming to start diets we’ll most likely never start.

One way to debunk a theory is to put it to the test, so writer Tara Parker-Hope jumped right in by cooking up a Turkey Day feast. Here’s what she made:

• A six-ounce serving of turkey with the crispy skin on, including 4 ounces of dark meat and 2 ounces of white for a total of 299 calories.
• Sausage stuffing at 310 calories — go big or go home, right?
• Dinner roll with butter for 310 calories
• Two kinds of potatoes are always in order during the holidays: Big serving of mashed sweet-potato casserole made with butter, brown sugar and topped with marshmallows for 300 calories per serving, and a half-cup of mashed potatoes for  140 calories of starchy goodness.
• Green bean casserole at 110 calories for 2/3 cup, cranberry sauce at 15 calories and roasted brussels sprouts (veggies!) for 83 calories.
• Then there’s pie that has to get shoved in there — pumpkin pie at 316 calories per slice, pecan pie for 503 calories and lots of whipped cream on all of that at 100 calories.

Grand total: 2,486 calories.

No one could look at that list, eat everything on it and complain of having room left over. Even if you add in breakfast and some booze and sure, you could get close to 4,500 calories, but it’s probably not as normal of an occurrence as we think.

Our stomachs can usually only fit about 8 cups of food on average, and after ingesting 1,500 calories our bodies emit a hormone that causes nausea. Which means, “STOP EATING, self! You’ve had enough already.”

Go on and test it yourself this Thursday. But don’t feel too horrible if you’re not ready to start that diet on Friday. You’re probably not doing as much damage, calorically speaking, as you thought you were.

We at Lenders Commercial Finance, wish you and yours, the best of Holidays!

When you snap out of your food coma, we hope we can help you free up some working capital

The Tumbling Twinkie

An article I found that discusses the epic downfall of the Twinkie.

Here's to a little bit of fat America going away!


This Story was written By John Carney | CNBC 

When Hostess Brands announced that it would close up its operations, the forces most responsible for that decisions were two hedge funds that control hundreds of millions of the debt of Hostess have finally decided that they won't squeeze any more filling into the Twinkie.

The funds, Silver Point and Monarch, are what are known as distressed debt investors. They buy the debt of troubled companies-usually at steep discounts. Some consider them white knights who are willing to take make risky investments in companies on the verge of failure. Others say they are "vulture funds."

Only Silver Point and Monarch could have kept Hostess out of liquidation and kept the Twinkie bakery ovens firing. But they were, ultimately, unable to reach a deal with the unions that represents the workers who make and deliver products like Twinkies, Wonderbread and Ding Dongs. Without large union concessions-what some would say, total union capitulation-the hedge funds decided Hostess would have to die.

This is not the first time Hostess Brands has entered bankruptcy. Weighed down by an balance sheet heavy with debt and pension obligations, costly labor rules, and declining sales, the company sought bankruptcy protection under Chapter 11 in 2004.

After nearly five years in bankruptcy, Hostess emerged in 2009 under the control of a private equity firm called Ripplewood Holdings, which invested $130 million of new capital in the company. The keys to coming out of the bankruptcy the first time around were concessions by the two groups most responsible for Hostess falling back into bankruptcy just 3 years late: the unions and lenders that owned secured company debt nominally worth around $450 million.

In the deal that allowed Hostess to come out of bankruptcy, the unions agreed to concessions that would save the company around $110 million a year in labor costs. The lenders, led by the hedge funds Silver Point and Monarch, agreed to provide a new secured loan of $360 million, forgive half the existing debt, and exchange the rest of that debt for a payment-in-kind loan.

(Read More:NOOOOOOOO! Say It Ain't So! Twinkies Maker to Liquidate, Lay Off 18,500)

It's worth mentioning that we don't know how much of a loss-if anything-Silver Point and Monarch took on the loans by agreeing to reduce the amount outstanding. As David Kaplan pointed out in hisextensively detailed article in the August 13th issue of Fortune, the amounts the hedge funds paid for the debt are not in the public record. Distressed debt funds-critics call them vulture funds-typically pay far less than face value when buying the debt of troubled companies.

This wasn't enough to save the company.

The company's sales declined and attempts to roll-out new products more in line with changing consumer tastes flopped. Ripplewood put tens of millions more into the company in the form of new equity and subordinated debt. Silver Point and Monarch put in another $30 million and then, after the company filed for Chapter 11 again in January of this year, another $75 million.

What happened next was just a mess. The CEO quit. The unions described the pay of the new CEO as "looting." Acrimonious would be a very mild term to describe relations between management and the unionized workers. One person familiar with the matter described it as "all-out war." The place to turn for the details of this is, again, David Kaplan's Fortune article.

Ripplewood basically fell out of the picture during this period. Its equity investment was worthless, and it's subordinated debt was deeply underwater. It just stopped showing up at negotiations with the unions, according to Kaplan.

The folks left at the negotiating table with the unions were Silver Point and Monarch.

Here's how Kaplan put the situation as of last summer:

What the hedge funds want is some degree of capitulation from a union whose members will otherwise lose thousands of jobs in liquidation. If the hedge funds don't get it, they've concluded, the company isn't worth saving. Without the hedge funds' blessing, no Hostess turnaround is possible. Right now, according to sources with knowledge of Hostess's debt structure, Silver Point and Monarch each hold Hostess obligations with a market value of between $50 million and $100 million. Those sources also say each hedge fund probably paid somewhere between $125 million and $175 million for that debt. So even with losses to date, both hedge funds have ample skin in the game -- skin they'd like to get out of the game sooner rather than later. Of course, if the hedge funds again forgive sizable debt, they'll probably want sizable equity in return this time.

Finally, there are the woebegone Teamsters. They have plenty of skin as well -- and feel as if they've been fleeced out of almost $100 million from Hostess after the company "temporarily" ceased making union pension contributions last August. That move by Hostess was a breach of its collective-bargaining agreement with the unions. The Teamsters' leadership has fulminated to its membership about the hedge funds in particular. "The financial folks make a living of feeding off distressed companies," Hall says. "They lose sight of the fact that there are real families with livelihoods at stake." At local unions across the country, the hedgies have become the devil incarnate.

Now we know how this story ends. The Teamsters agreed in September to a deal with reduced pay and benefits. But the Bakery Workers union rejected the deal and went on strike. Hostess warned that if the strike continued it would not be able to stay in business. But the strike went on. And now Hostess is out of business.

The hedge funds concluded that Hostess isn't worth saving. The unions either bet the hedge funds would blink before putting the company into liquidation or decided that it was better to sacrifice the jobs of Hostess workers than give in to demands for further pension concessions.

(Read More: Not So Yummy: 15 Major Fast Food Failures)

Although it now appears that Hostess is done, this is not the end of the story. The brands Hostess owns retain value. Someone will likely produce Twinkies again. The plants and workers are also valuable and will likely find bidders. Silver Point and Monarch-as well as the other secured creditors-will realize some value for their investment in the company, although certainly far less than they had hoped. (But, since we don't know how much they spent on the debt, we may never know whether they gained or lost on the deal.)

And, of course, we'll be in for a long bout of recriminations as everyone involved points fingers at everyone else. The truth of the matter may just be that Hostess was a failed enterprise that just could not be saved.

Cheap Debt Investment

A great article pulled from CEO.com


Although the subject matter below is based on real-world experience, all characters, figures, and settings are fictitious and are not based on the financial situation or strategy of any specific company.
From: CFO, Any U.S. Investment-Grade Company
To: Treasurer
Priority: High
Subject: Anything we can do to take advantage of such low borrowing costs?
From: Treasurer
To: CFO
Priority: High
Subject: Re: Anything we can do to take advantage of such low borrowing costs?
Good Morning, Boss:
I am almost certain that borrowing costs for investment-grade companies have NEVER been lower. I have maxed out the most reliable data sources and cannot find a time when U.S. corporations could issue debt at lower interest rates. Thedriving force behind this low-rate environment is investor demand for both yield and safety.
Investment-grade debt has become the best game in town for investors, as it offers reasonable safety and return at a time when the stock market is one bad headline away from a crash and U.S. Treasuries offer paltry yields. This high demand for quality corporate paper, combined with such low Treasury rates, has greatly compressed corporate credit spreads, pushing all-in bond coupons to unprecedented levels (bond coupons = reference Treasury rate + corporate credit spread).
So, without further delay, I give you five great ways to take advantage of cheap debt:
Capital expenditures. It may seem like the global economy is doomed forever but we should be optimistic. Now is the time to open that new plant, purchase that new fleet, and develop that new product. We can borrow at 2%, 3%, or 5% for 5, 10, or 30 years, respectively. Let’s reinvest in the business in anticipation of better times; when demand returns, we will be thanking ourselves for recognizing and seizing a great opportunity.
Acquisitions. Another great way to invest in our business is via acquisition. Let’s go after those targets we have been eyeballing the past few years. We can justify paying a full valuation with the low hurdle rate set by borrowing costs. While other companies sit on the sidelines and wait for Congress to save the economy, or destroy it, we can be proactive in growing our business.
Pension contributions.Defined-benefit pension plans remain grossly underfunded. Falling discount rates and government regulation have created the perfect storm, inflating pension liabilities so much that pension asset returns have no chance of closing the gap. By issuing low-cost debt and contributing the proceeds to pension assets, we can finally catch up and get our funded status closer to 100%. As an added bonus, a debt-financed pension contribution is both tax deductible and leverage neutral (rating agencies treat unfunded pension liabilities as debt).
Share repurchases. With very low leverage and anxious shareholders, now would be a great time to send a bullish signal by issuing debt to repurchase shares. First, a debt-financed share buyback is accretive to stock price and earnings. Using debt costing 2% after tax to take out equity costing more than 10% (required return + dividend), we can reduce our cost of capital, potentially increasing the value of the company. Also, fewer shares outstanding means an earnings-per-share boost at the end of the year. Second, such a bold move of using debt to repurchase shares sends a very strong message to the market that our shares are undervalued. Third, with looming tax increases on capital gains, now would be a good time to offer shareholders a way out at a 15% capital-gains tax rate. That rate can only go higher next year.
Prepaying future cash dividends. Tax increases on dividends are also looming, with the upcoming expiration of the Bush Tax Cuts at the end of this year. Congress’s failure to act, a high probability, will result in the tax on dividends moving from 15% to more than 40% in some cases.
We can do our shareholders a big financial favor now by borrowing to prepay the dividend for the next two years, helping them avoid a much higher potential tax bill. So instead of paying our shareholders the annual dividend of $2.00 per share, we would pay a $6.00 dividend this year. The incremental $4.00 today would be taxed at 15% and net the shareholder $3.40 per share. Paying the $2.00 dividend the next two years would net the shareholder only $2.40 per share should the dividend tax go up to 40%.
It is important to mention that this environment will not last forever and we will regret not taking advantage of this opportunity someday soon. Interest rates will reverse course, and when they do, the moves will be quick and significant.
The Treasurer
Patrick Guido is vice president and treasurer of publicly held VF Corp., a $10 billion global apparel and footwear company with brands that include The North Face®, Vans®, and Timberland®. Patrick has more than 17 years of experience in corporate finance. He earned an undergraduate degree from Georgetown University and an MBA from Vanderbilt University.
CFO.com (http://s.tt/1r5DS)


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