Cash Flow, Growth Money, Business Funding Beyond the Banks

Businesses need money to grow. A business cannot survive
just because it has a better product, an exclusive market
or the best method of distribution. Funding in the form of
working capital and cash flow is required for progress!

But where does a business go when the bank says no?

Asset-Based Lending - What Is It and How Can It Help?

The asset-based lending industry helps a business to
leverage its "liquid assets" (most commonly accounts
receivable, i.e. invoices/contracts, purchase orders) and
gets cash to the business much faster than traditional
sources.

As a result, the business has this cash for day-to-day
operating expenses -- when it is needed - rather than
having to wait. Then, the business can do what it does
best - it's business - and produce the best quality product
and/or service while escaping the, "Is the check in the
mailbox?" syndrome so many businesses encounter.

One of the differences between the asset-based lending
industry and banks/traditional sources is this industry
looks at the company or business PAYING the invoice, bill
or contract for its security as opposed to the credit
history, cash flow and time in business of the business
issuing the invoice.

Unlike traditional sources, asset-based funders do not have
a "commercial lending section" to handle all business
funding requests. Rather, there are specific funders who
specialize in construction, manufacturing, the trades,
professional fields such as engineering, medical, etc.
They know that "one size" does NOT fit all when it comes to
business funding needs.

Asset-based lending has always been available to "big
business" but is just recently becoming utilized by "small
business." The business world has begun to realize what
the SBA has been saying for a long time, "The total of
small business is larger than big business," and wants to
tap into this gold mine.

Banks, realizing it is in their best interest, oftentimes
send clients they are unable to help to asset-based
lenders. Then, when the client has the financials the bank
needs, their friendly banker who referred them to the
asset-based lender can re-enter the picture.

Asset-based lenders also work in conjunction with an
already established banking relationship. However, they
are able to be much more responsive to the urgency of a
businesses cash needs to take advantage of profit
opportunities when they present themselves. For example:

Right after Katrina, a purchase order funder in the
asset-based lending industry was able to help a power
company fulfill a $2.2M order from the USACE. The power
company's bank was not able to process their funding
request fast enough and they were about to lose the order.
The purchase order funder took the application on Wednesday
and the order was being shipped by Friday of the same week.
The power company was able to fill that order and other
future ones due to the speed with which they were able to
get the funding they needed.

When evaluating an asset-based funding deal, the cost of
this funding should be considered in the context of the
benefits to be received rather than on a stand-alone basis.
Compared with other financing alternatives, asset-based
lending is very cost effective and efficient and is there
"when" you need it to take advantage of profit
opportunities in the market such as we now have in
Louisiana, post-Katrina.

As an example, we all want to shop at Wal-Mart (banks) and
get the most for our dollar. However, Wal-Mart is often
crowded, takes too long, or is not close enough if we live
in smaller communities. So, we pull into the convenience
store or other smaller, boutique-type merchant (asset-based
lenders) where we know we can get what we need right away,
when we need it, even though it might cost a little more.
When a business needs funding, it NEEDS it then and not
later!

Russell Handley, owner of a communications company in
Newburgh, NY installs cable lines for large cable
companies. It is standard for these firms to take as long
as 90 days to pay bills. So, Handley uses factoring on
occasion and gets his money quickly for his invoices that
allow him to take on more work. In fact, he credits
factoring with having helped him increase his annual
revenue from $500,000 to nearly $4 million in seven years.
"We wouldn't have grown as fast as we did without it," he
says. (Pofeldt, Elaine. "Raising Capital." Success May
1999.)

Some of the most commonly used options available through
asset-based lenders are:

1) Accounts Receivable Factoring
2) Purchase Order/Contract Funding
3) Business Credit Card Receipt Advances
4) Equipment Leasing

So, in the future, "If Your Bank Says No," why not check
out the options offered by the asset-based lending industry.

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Debra Maples is a business cash flow consultant. She
assists businesses with their working capital and cash flow
needs through non-traditional alternative funding tools
which help a business to leverage it's liquid assets. This
enables them to self-finance their own growth and working
capital needs.
http://www.yourcashflowconnections.com