Business Financing Blog

Why US...

05/16/2012 09:46:00

When I do business with someone, I usually care about 3 things; do they care, will they give me good service and is there value. My recent trip to my cell phone carrier reminded me of this; the price was competitive but the guy behind the counter and over the phone could care less about me, their product and how they represented their company. So I switched carriers. All of us balance our own criteria because bargain-hunters only care about one thing which is price and superquality-minded individuals don’t care about cost as long as the product or service is exactly the way they want it. Income will often determine where our focus is but for “middle” America, we like a blend of benefits.

All of us are either in business for ourselves, work for someone or are in some combination of those 2 realities. But we all should know what benefits and value we bring to the table; what are we good at and how are we better than others. Rest assured, if you’re not asking those questions, your customer’s certainly are. This gives us the chance to evaluate what we do better and hopefully our attributes are a “fit” for the things you value as well.

Here are points which give First U.S. Finance the competitive edge:

We are a brokerage firm which means we contract with multiple lenders and investor groups to finance your equipment and expansion projects. Having multiple sources means that you have multiple opportunities for approval with the best terms possible. Go to alender with one source and you have ONE chance.

We service you more effectively than other broker firms and lenders. We offer market rate quotes via email usually returned within the hour if not that same day – the truth is, those online rate calculators are updated monthly and some of them quarterly so you will not get an accurate estimate for your budget. We could offer low teaser rates but we’d prefer to give you an honest estimate.

We respond to fit your schedule, not ours. Test me on this, call your local commercial lender on Saturday or Sunday – good luck getting through to anybody and if you do, the call center will only take messages. Then try calling me, if you don’t get an immediate answer you will get a call back within the same day if not hour. Those who have spoken to me on the weekends are always pleasantly surprised; we know weekends are for leisure but if you have a hot project then we’re as determined as you are.

We provide you value and are motivated. What I like about golf is that only the top cut gets prize money; there are not too many spoiled athletes that get to sit on the bench and still get paid in golf. As a broker firm we are in exactly the same position; we perform, get you or your client funded and we get paid and if we don’t then we get nothing because unlike other firms, we don’t collect fees just for “trying”. Credit reviews, consultation, estimates, advice... no cost to you!

Base Programs & Criteria

05/01/2012 15:51:00

Financing equipment and projects for small to mid-size business in the U.S. is always in a state of change. Probably for all companies, the world economy and political shifts has some effect on how we do business here at home. As programs and criteria change, we do our best to keep you updated.

Here is a list of our current services:

Special Energy Programs – special solar energy financing is available for projects of $500K and up with terms from 5-20 years and rates from 4-7% interest. A full 3 years financials are required from the borrower and the structure can be either an Operating or Capital Lease. We have several variations of this energy finance program which can be tailored to meet the customer’s needs. The key to getting longer term approvals is for the borrower to have proven stability and ownership of the property.

Standard Programs – our minimum for any finance is $20K. Standard terms are 2-7 years. Base commercial rates are 6-9% interest. What determines the TERM and RATE is the total dollar amount of the project and the credit history the borrower. Minimum time in business, for any of our programs, is 2 years and the company must operate and be licensed in the U.S. Standard programs apply to commercial businesses and non-profit organizations. A full credit review can include 2 years of complete financials and, where appropriate, guarantor’s financials as well.

Municipal Financing – for cities and government districts which can include hospitals, schools, libraries, police and fire stations, etc. Minimum amount is $100K and terms can extend from 15 to 20 years with rates at 3-5% interest. What determines the TERM and RATE is the bond rating of the municipality; the higher ratings get the lower rates and longer terms. Smaller cities with no bond rating may need to provide full financials; medium to larger ones only need to complete acredit application.

Merchant Loans – designed for fast access to working capital; if you have credit card transactions as part of your business then you can get money based on the monthly volume of your credit sales. The process is very quick with minimal paper work and availability from $5K - $150K with 3 to 18 month terms.

Factoring – designed to access working capital based on your accounts receivables; factoring can be fast working capital which helps cut the lag time between billing and payment cycles. This is a great tool for businesses which offer a high volume of credit terms to their clients and can be used continuously or during peak times of the year.

"A" Plus Credit - Where Do You Rank?

04/12/2012 13:46:00

When someone says a company has “AAA” rated credit they mean the credit is good, real good. In essence, they are at the highest level of credit worthiness which is a measure of their ABILITY and READINESS to pay back debt. Keep in mind it’s both attributes; just because someone is sitting on $1MM or has good cash flow doesn’t necessarily mean they have good credit because they may be “able” but not “ready”. The “readiness” to pay debt is indicated by things like the Paydex score (how timely open accounts are paid back) and how effectively other lines of creditor other leases/loans have been managed in the past.

The other end of the spectrum is the C and D credits which are businesses which do not show they are capable, willing or able to pay back debt consistently. These are the cases where asset-based lending and factoring receivables can be used. If you have solid assets like equipment or real estate or accounts receivables from a variety of established clients, then credit rating can be secondary and you will have access to capital.

Overall, 3 companies report on business credit which are Moody’s, Standard & Poor’s and the Fitch Ratings; they measure key criteria and come up with a risk profile for each type of entity very similar to the FICO scoring system.

When applying for equipment financing, it is good to be aware of all the factors that are being measure so you can have a realistic understanding of the process. A FICO of 650 may work for a mortgage lender but not for an investor group funding technology projects. Keep in mind that to get the best rates, you have to have a positive balance in all credit areas; not perfect balance, just positive. If you have $1MM in the bank but poor personal credit, poor cash flow and a default, you may get approved but it would most likely be at a riskier credit level. When there is weakness in one area, strength in other areas can help boost it up but only to a certain extent.

As guidelines, here are general criteria for small business financing; mid size companies have similar criteria without the personal credit component factored in.

A+ Credit

Perfect personal and business credit with many lines of credit
No Bankruptcies
Low revolving debt
Few credit inquiries in last 12 months
No evidence of suits, liens, collections, or judgments
No foreclosures or repossessions
Excellent score in credit desk
No slow pay activity on personal or business credit
Business should be established over 5 years with strong D&B Report
Strong financial statements may be requested for lowest rates
True A +credit can apply for lowest rates available

A Credit

Excellent credit with many lines of credit
No Bankruptcies
Low revolving debt
Few credit inquiries in last 12 months
No evidence of suits, liens, collections, or judgments
No foreclosures or repossessions
Excellent score in credit desk
No slow pay activity on personal or business credit
Business should be established over 2 years with strong D&B Report
True A credit may qualify for best "Application Only" rates available

B Credit

Good overall credit with many lines of credit
No Bankruptcies
Lower revolving debt, under $25,000 and under 50% credit utilization
Few credit inquiries in last 12 months
Evidence of suits, liens, collections, or judgments that are satisfied or under $1,000 aggregate
No foreclosures or repossessions
Good score in credit desk
No recent slow pay activity on personal or business credit
New businesses and Business over 2 years old with good business credit

C Credit

Bankruptcy on credit bureau or business over 5 years old
Evidence of a few slow pays to creditors
Open suits, liens or judgments (less than $1,000 aggregate)
No foreclosures or repossessions
Revolving debt considered high, or high utilization of available credit
Explainable, high credit inquiries in last 12 months
Credit bureau scoring not within credit desk standards
These credits are considered on a case-by-case basis. Financial statements may be required.
Unfortunately, we cannot lease to businesses under 2 years old with this credit criteria.

D Credit

Bankruptcy less than 5 years old
History of slow pay to creditors since bankruptcy
History of suits, liens, judgments or collections
Foreclosure or repossession
High revolving debt on credit cards (without acceptable tax returns)
High credit inquiries in last 12 months
Structure programs usually required if approvable and financials will be required.

Commercial Solar - Financing to Net Zero

04/04/2012 00:25:00

HOW IT WORKS: Photovoltaic (PV) cells are made of special materials such as polysilicon. When sunlight hits a solar cell, some is absorbed within the semiconductor material. As light energy transfers to the semiconductor it breaks electrons loose, allowing them to flow freely and efficiently convert direct sunlight into electricity for DC power generation.

There are many companies throughout the U.S. whichspecialize in utility-grade solar power for commercial buildings of all types. For many small to mid-size manufacturers, this technology is a great opportunity to generate your own electricity, eliminate utility costs, take advantage of numerous subsidies and help save the environment. In many states, like in California, in 2013 manufacturers will have to comply with reducing wastes and energy consumption at a substantial level.

The first step, when considering a commercial solar system, is to perform a utility spend and cost/benefit analysis. The Energy Audit is a value assessment and technology road map to evaluate if implementing a solar, or any Green Tech energy saving system, makes financial sense for a facility and then later consider taking large-scale facilities entirely off the grid, or remain grid connected.The goals of the energy audit are to verify each site’s ability to produce power, set the logical order of proposed energy solutions and prove the overall financial viability of the project. The audit may indicate that a solar systemis not right for your needs at the current moment but at least you will know where you stand.

Many projects are now making financial sense and withour 5, 7 and extended 12 year lease financing programs, for companies that qualify, letting your rooftop sit empty is a complete waste of a potentially valuable resource.

Merchant Cash Advances - The Best Source of Small Business Capital

04/02/2012 15:38:00

Business cash advances have been available as sources of working capital for small businesses for many years, but until very recently, most business owners preferred other methods of funding their endeavors, going to private investors, or applying for traditional loans.

Over the past year or so, however, there have been several changes to the small business financing landscape, leaving unsecured lines of credit almost gone, many banks no longer even lending to businesses, and the banks that are still lending commercial funds requiring more documentation and more collateral.

This makes it the perfect market for merchant cash advances, short-term working capital that is usually released in amounts under $100,000, but can be as great as $500,000 for the right borrower, and is based on a business's future sales.

While easy qualification is one of the main reasons small business owners turn to cash advances, there are several other factors to consider. Here are a few of them:

1) Credit card factoring: The most common form of a merchant cash advance is based on credit card factoring. The amount of the advance is based on the actual credit card transaction volume a business completes, and the repayment is typically five to ten percent of monthly credit card sales until the advance is paid back. This means that payments are smaller in slower months, while highly successful months knock down more of the balance.

2) Collateral is not required. Instead, a business owner provides proof of sales receipts. Most merchant cash advance lenders require a year of credit card transactions averaging $5,000 a month, but these numbers vary from company to company.

3) There are no closing costs. Because business owners apply directly to the funding company, and receive funds by electronic funds transfer, there is also no escrow, and many cash advance companies waive their application fees from time to time, or simply don't charge them at all.

4) The process is fast. Most cash advances are approved within a week, and funded within 72 hours of approval, and many applications don't even take that long to be processed.

5) Advances can be repeated. Once a cash advance has been repaid, business owners can usually apply for a new advance from the same company with even less paperwork and processing time than the original loan.

Obviously, small businesses still need banks as depositories, but with merchant cash advances, almost any business owner can find funds to grow their company, whether it's currently struggling or successful.

4 Tips to Getting Your LED or Solar Project Financed

03/22/2012 14:01:00

LED and Solar technologies and interest in those markets is booming. The cost savings are tangible and the stability of much of the hardware has reached a level where its longevity can be relied on. Makeshift, flimsy equipment has, for the most part, disappeared and been replaced with extended warranties and well engineered products. Companies and manufacturers can save thousands of dollars by implementing the new energy saving systems but it takes capital to make those projects happen.

How much capital? Upgrades can range from a hundred thousand dollars to several million and, as we have experienced with our volatile economy, using cash reserves to fund them can be scary. It is well known that business lending has been constricted but not in all the available channels; many wholesale lenders and private investor groups are funding energy projects throughout the U.S.

So what do you need to do or have to get your new LED or solar program funded?

1) Your financial paperwork in order; three years taxes, financial statements and interim statements all in electronic format. Before applying for funding have everything organized and if something is missing, wait until you have it because it will sit in underwriting until it is complete. Make sure all liens or outstanding judgments are resolved.

2) An Energy Audit Report. Your vendor should provide you with a detailed analysis regarding the cost savings of implementing their product. Typically, the costs savings will add to your bottom line and be used to substantiate taking on new debt. If it takes ten years to break even then that may push you out beyond the term lenders are able to offer.

3) Vendor Profile. Have some background information on your vendor; how long they have been established, what other projects they’ve done so you can validate their stability to the lender. Start-up vendors in this market will not likely be approved so choose who you work with carefully; their background and experience will be important to the underwriters.

4) Evaluate your Net Worth. Sit down with your CFO or accountant and assess your company’s net worth. If it is not two to three times more than the cost of your project then you may need additional assets to be used as collateral to support the debt. At this point, you may consider trimming down the project size or doing it in several phases.

Financing Green Tech projects requires a little more attention to detail and a stronger credit than standard equipment. You don’t have to be strong in all the areas we reviewed but a weakness in one means you will have to have additional strengths in other key areas. The equipment itself will not serve as collateral and knowing that going in will help bring your expectations within reason. Commercial lenders, for the most part, are staying away from financing Green Tech but private investors are out there funding them every day but you have to be prepared to know what it takes to get approved.

New Solar Finance Programs – Up to 12 Years

03/01/2012 17:41:00

First U.S. Finance has a new direct lender and capital partner with $19 billion in assets, established in 1923 and with expertise in the solar industry. They are the only ones offering a “PPOL Power Purchase Operating Lease” for up to 12 years in term. We are very excited to partner with them since we know it will be a great boost in our ability to finance our clients and vendors in the solar market.

Here are some of the DETAILS and BENEFITS:

2 Finance Options: Operating Lease Options from 3-12 years / Loan programs from 4-7 years
Project size: $50,000 to $5MM
Lease rate range: 3-7% / Loan rate range: 4-6%
Can finance solar projects in all 50 states
Progress payments available on approved transactions
Operating Lease buyout as low as 9% of project cost
Terms from 36 to 144 months
The ITC/Depreciation is assignable to the lender
Program for Commercial Businesses only; Non-Profits and Municipalities are set up as loans
Credit Profile: 5 years in business, profitable, $1MM+ of tangible net worth, property owner, reviewed or audited financials preferred
Financials Required: 2 years financials and interim statements and personal financials if applicable
No documentation or application fees – Free approvals

This is a great opportunity to speed up the return-on-investment for solar customers; it will allow them to Go Green and make the financing work for their operation. We look forward to working with you on these types of projects.

How to Get Your Ship Back on Course

02/20/2012 16:05:00

ASSIGNMENT:

The company was experiencing cash-flow problems because they were in a growth phase. There was no structured accounting system, and no reports were done. The CEO wanted an in-depth study done, with an action plan.

MSN Associates began by analyzing the firm’s working capital cycle and realized that billing dates were later than client deadlines, increasing AR days, and exacerbating the cash needs in a growing company where salaries were the biggest cost. Due to rapid expansion, the company experience declining profitability and cash flow pressures. We did a comprehensive management accounting analysis to pinpoint problem areas, where we discovered that profitability was declining due to leakages in possible billing time, etc.

TIME PERIOD:

Twelvemonths

STORY:

MSN instituted a rigorous, periodic billing method to meet deadlines, and installed an accounting system, as well as recruited and trained a bookkeeper to deliver timely reports. As the company expanded, we obtained bank facilities and set uprobust routines and reviews to manage profitability, then led an initiative to form and educate an internal steering committee to manage the company, to alleviate some of the mundane work from the owner. We held internal training sessions to improve employee management capability, including various leadership books and reading material.
MSN set up and conducted a retreat for a strategic planning session- resulting in a new name, vision, mission statement and action plan. We then engaged organization consultants to improve operations, and new software to improve operations and to focus company investment in designing and implementing a detailed performance improvement capability. We shifted the senior staff to performance based pay.

RESULT:

- Solved cash flow problems at each stage of growth

- Improved profits in a declining revenue period to be the best year of profits in 5 years.

- Developed a strong management team from existing staff

- Set up a long term management to focus on company growth

- Strengthened infrastructure in marketing, operations, and finance to serve long-term goals

- Ensured that company work processes and opportunities set it apart from competition

Minding your business by designing, building, implementing and sustaining financial management practices that increase business value. (213)784-2557. mnoohu@msnassociates.com. www.msnassociates.com

Business Lending: In Need of Short Term Capital?

02/16/2012 16:47:00

Small businesses and companies have cash flow fluctuations which can sometimes be hard to manage. Sales are unpredictable and emergencies happen and a shortage for working capital can easily occur. A bank credit line is perfect for these situations but what if your bank line is near capacity? Getting cash quickly, within a week, can be tricky. As we noted, if you have good accounts receivables, Factoring is a fast, effective way to get capital but if you’re in a business with minimal receivables we have another great solution; Short Term Working Capital Loans.

We offer Short Term Working Capital Loans with the following features:

Simple one-page application
Loans from $5,000 to $150,000
Fixed interest and fixed payments
Daily micro-payments collected only on business days
6, 9, 12, 15 and 18 month loan terms
A decision in 2 business days & funding within 7 days

As a multi-source business lender, we feel this solution fits a gap which many businesses can experience. It is another “tool” in your tool box of resources when trying to get working capital or finance new equipment. The program is based on average business bank balances or merchant account transactions –positive activity in either area can get you a quick approval to new capital.

What can we do for YOU today?

Top 6 Reasons to Use a Franchise Consultant!

02/01/2012 17:59:00

So you have been thinking of buying a franchise and you have started an online search? There appears to be a great deal of information online about franchising and you now feel confident that you can find a franchise on your own. Is there really any need to have a Franchise Consultant?

Of course you can find a franchise on your own but most people find the process overwhelming, time consuming, not to mention confusing. Using a Franchise Consultant who knows the ins and outs of franchising may be the way to go. Here are just some of the key advantages of using a Franchise Consultant:

1. There is No Charge For Their Services - Franchise Consultants get paid by the Franchisors to pre-screen candidates and provide information. If there is a “match” the Franchise Consultant will get paid out of the Franchisor’s marketing budget. Whether you use a Franchise Consultant or not, the cost of buying a Franchise is exactly the same.

2. Franchise Consultants Know More Franchises – Because their business is Franchising, they know about so many more Franchises than the average person and are educated about them. They know which ones are good and which ones to stay away from. You still need to do your due diligence but you’re way ahead of the game by using a Franchise Consultant.

3. Which Franchise is Right For You - Confused about which franchise is right for you? Not only do Franchise Consultants know more Franchises but through a process of discovery, they will help you narrow down your choices to the Franchises that are consistent with your interests, lifestyle, long term goals and financial considerations. This in itself is enough of a reason to use a Franchise Consultant.

4. Guide You Through the Process – As I said before, the process of buying a Franchise can be very confusing but the Franchise Consultant will be there right along with you every step of the way. They will be on the calls that you make to the Franchisors as well as the validation calls you make to the existing Franchisees in the system. Franchise Consultants will make sure you ask all the right questions and that you get all the answers that you need.

The top Franchise Consultants have acquired appropriate industry certifications and accreditations in order to be sufficiently knowledgeable. Some have even further distinguished themselves by becoming Franchise Sales Compliant by successfully completing acourse regulated by the FTC which is required for all individuals involved in the sales of franchises. Make sure the Franchise Consultant you choose to work with has these certifications.

5. Franchise Disclosure Document - The FDD or Franchise Agreement is a very comprehensive and detailed legal document that every franchise is required by law to file annually with the FTC. It will tell you everything you need to know about that Franchise from what your start-up costs will be, the background of all corporate officers, the contact information for all Franchisees currently in the system as well as the names of those individuals that left the system within the past year, financial statements on the Franchise’s solvency and much more.

Your Franchise Consultant will have a vast knowledge of how to read the FDD. They will know what to look for and help guide you through all aspects of the document. They will help you access, analyze and compare data related to industry specifics. And they will also be able to direct you to a Franchise attorney who will work on your behalf to help you fully understand all of your obligations defined in any franchise agreement, while also assisting you in the negotiation of your best deal and/or territory.

6. Complimentary Services – Not every Franchise Consultant offers complimentary services but here at Franchise Pros International, we offer all of our clients:

■ 1 Hour of Complimentary Franchise Legal Counsel

■ 1 Hour of Complimentary Small Business Accounting Consultation

■ Demographics Information

■ Checklists and Questions to Ask Both Franchisors and Franchisees

■ Ongoing Sales and Small Business Training for You and Your Employees

Our credentials include:

■ Certified Franchise Broker (CFB)

■ Certified Franchise Executive (CFE)

■ Franchise Sales Compliant (FSC)

■ Master Consulting Agent (MCA)

■ Certified Franchise Mentor (CFM)

Among many career/industry awards and recognitions, our company President Andy Lamedman is a recent recipient of the prestigious “Visionary of the Year Award” for “Outstanding Vision, Dedication and Commitment to Excellence.” Presented to him by the Franchise Brokers Association (FBA) at their Annual Conference in Orlando, FL, November 2011. Please call us at (888) 918-0110 or contact us for more information about our services.