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

Father Time is becoming forgiving these days

Enjoy the article, don't forget to read my synopsis at the bottom

"Sixty-five is the normal retirement age, but many older Americans are working much later in life and it's not just because they need the money.

The number of workers who are 75 and older has skyrocketed by 76.7% in the past two decades, according to research by the AARP Public Policy Institute. "We are living longer, healthier lives," says Kerry Hannon, author of Great Jobs for Everyone 50+. "And the types of work that people do is not as labor intensive as it was in our parents' generation."Sixty-five is the normal retirement age, but many Americans are working much later in life, and it's not just because they need the money.

There are a number of reasons why Americans workers may decide to put off retirement. Some may just love their jobs; others may need more money. But even those who have socked away plenty of cash are often terrified about rising medical bills and want to keep earning, Hannon says.

While the 75-plus group of workers has jumped, it's still a small percentage of the American labor force. It represented 7.6% last year, up from 4.3% in 1990.

But there might be more 75-plus workers if it were easier for them to keep their jobs. "I really love my work, and I feel quite useful," says Judge John J. Driscoll, a juvenile court judge in Westmoreland County, Pa. But because he turned 70 last year, he now faces mandatory retirement.

Instead of quietly retiring in January, Driscoll joined five other Pennsylvania judges in a lawsuit seeking to have the right to continue working past age 70. The case, filed in November, claims that Pennsylvania's mandatory retirement provision discriminates against people on the basis of age.

It's hard to know how many older workers are also forced to retire. But there is a growing number of older Americans who are not retired and are in search of a job. The number of unemployed Americans age 75 and older increased from 11,000 in 1990 to 75,000 in 2011, according to AARP.

Some might have lost their jobs during the recession and haven't been able to find another. "The longer you have been out of the labor force, the less likely you are to come back in," says Sara Rix, senior strategic policy adviser at the AARP Public Policy Institute. "There is the question about skills, whether you have what employers want because technology has kept changing while you've been out of work."

American who are 75 and older tend to have certain types of jobs. For example, 25% have professional occupations, such as doctors and lawyers, while another 25% have jobs in retail trades, Rix says.

Older Americans in search of jobs should consider growing fields, such as health, education and not-profit organizations, Hannon says. "All kinds of small businesses need people with expertise," she says. "Then you can have a part-time gig with flexible schedules.""

Courtesy of: Christine Dugas, USA TODAY

        I found this article interesting for multiple reasons. First, as a resident of Pennsylvania, it was surprising that an employer can give you the nudge into retirement from your job; if you can no longer do the work, or are significantly slowing down a process, it is understandable. The other zinger is the percentage of people who aren't ready to stop working, go old people!

People who are getting up in their years to stop working, is a hindrance on their longevity. This conversation is always a good one to see what other people think: if you continue your lifestyle through adulthood and into old age, such as work, activities, so on and so forth, will that help make your body forget how old it is? Will continuing to live a proactive lifestyle ward off the sedentary lifestyle of retirement that too many people accept.

A quote I use relatively often to people I speak with, is that age is but a number; life is what you make it.  As a person in his mid-20's, I am clearly wet behind the ears on this topic, but logic steers me in that direction. If you can avoid illness and injury, and keep rolling with the punches, there should not be a reason you can't ward off your meeting with St. Peter a little longer than expected.

              So now that it is 2013, New Years resolutions in place, but slowing to a halt; keep that resolution at the gym a little longer, try to run a 5k, join a zumba class, go for a walk with your significant other. Studies show that a half an hour of activity a day cannot only increase your lifespan, but your health benefits sky rocket. It is all about determination and dedication, change, and focus. 

             Life is for the living my friends, cheers!

  

             -The Fickle Financier
              Commercial Lending for the Entrepreneur

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

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

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
Apply Today for a loan
Lenders Commercial Finance

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







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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)


Business Line of Credit for Entrepreneurs

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