Our President Glen Dalzell explains how equipment leasing can help your business acquire much needed tools of the trade

Depending on what your business does, new machinery and equipment (M&E) may be essential to allow your business to grow and remain competitive. Manufacturers know all too well how expensive specialized M&E can be. Many businesses don’t have enough available cash or credit to purchase the equipment they need. Equipment leasing can help your business “rent to own” that new piece of equipment that will take your productivity to the next level. Purchasing equipment outright may not be a viable option for your growing business. Start-ups can have a difficult time securing bank financing which makes leasing a great alternative. Everything from computers to phone systems, trucks and trailers to manufacturing equipment– can be leased for a flat monthly payment that your business can afford.

Equipment Leasing Benefits:

  The benefits of equipment leasing are easy to see. Spergel Corporate Finance (SCF) works with several leasing companies and can source the financing you need to help your business succeed.

• Quick access to the funds your business needs to purchase equipment and machinery.
• Affordable payment terms that will help your business continue to grow without cash-flow problems.

• An opportunity to secure funding if traditional lenders (banks) have turned you down.

How Does it Work?

Our leasing partners will advance funds to purchase the M&E you require. You will be required to make a modest deposit (10-20%) and your business will make a flat monthly payment for the term of the lease (typically 3-5 years). M&E leasing is similar to leasing a vehicle. If your company continues to make your lease payments and honour the terms of the agreement, your business will own the equipment at the end of the term. The buyout amount will vary depending on the structure of the lease. Once the leasing company has paid the vendor for the equipment, it will be delivered to your location and your business can commence installation and production. Leasing is a practical alternative to depleting valuable working capital and/or credit facilities and gives you the benefit of knowing what your monthly payment will be. If you think that M&E leasing may be the right solution for your business, please contact SCF and we can start the process and determine what your business may qualify for.

Purchase Order Financing – The Basics

Your business is booming, you’ve got orders – lots of orders. The prob lem is cash flow – there will be times when there is simply not enough money to cover the cost of doing business. As a result, there may be an order from a client that you cannot fulfil due to lack of available funds. Turning the order down is now an option. To avoid such scenarios, purchase order financing may be a good solution. How can purchase order financing help and how does it work? Purchase order financing pays up to 100% of the funding you need and can provide additional capital beyond what you might typically be approved for based on your books. Here are a few highlights of how this type of financing works:

• A purchase order is required from the customer
• Applies to finished goods only
• Goods must be shipped directly to the debtor
• Financing doesn’t cover deposits, the client must cover all deposits

Purchase order financing is quite easy to qualify for. Unlike bank financing, you are not required to have an excellent credit rating. What is important is the credit standing of the company who has placed an order with you, not your business itself. This makes purchase order financing a good option for new businesses and those with an average credit rating.

Supply Chain Financing 101

How can you buy more time to pay suppliers? Or maybe you want to secure funding now with a promise to pay early? With no cost to your supplier to extend terms and working capital at your disposal to ensure seamless order delivery to your customers – supplier credit seems like a win for everyone. If business (and your credit) is good but other factors are impacting your access to funding, then supply chain financing is worth exploring as an option. How can supply chain financing help and how does it work? First of all, supply chain financing is a solution that does not require a purchase order. If your business has good credit and doesn’t have purchase orders this option may be suitable for your cash flow needs. Financing can be obtained for finished goods, raw materials, general inventory – or whatever it is that you need. Here are the key elements of how this type of financing works:

• Financing will cover all deposits and final payment
• Funder buys goods and sells them to the client immediately thereby converting the loan to an account receivable (A/R)
• Goods are generally shipped to the client

Typically, when the funder converts the loan to an account receivable insurance is required. It is because of this insurance that we recommend you have good credit to explore this option. Receivable insurance is used to back stop the transaction in the event of non-payment. Are you facing a large order and in need of capital? Let’s explore options for your business with working capital solutions that can solve your immediate cash flow problems.

Do You Understand the True Value of Using a Commercial Finance Broker?

Your small or medium-sized business has financing needs – and the first place that comes to mind is probably your bank. It makes sense to go to your bank first, traditionally, the bank is the place that will offer you the best financing terms. However, you may not meet the lending criteria your bank has set, your application could be denied – leaving you wondering where you went wrong and where to go next.

You can avoid financing hiccups with the aid of a Commercial Finance Broker. Similar to buying or selling a house and using a mortgage broker, using an intermediary to secure the funding you need will greatly increase your success rate. Buying or selling a business can be best facilitated with the help of a business broker because he or she will be able to connect you with a variety of lenders and will have the expertise of knowing which lenders to approach.

A Commercial Finance Broker is a professional in the know.

Your broker will understand the market and be able to assist if you have a complex or unique financial situation that a traditional lender might not understand or be willing to work with. Understanding your specific business needs is paramount to finding financing options that fit your industry and no professional is in a better position to do this than a Commercial Finance Broker.

A Commercial Finance Broker understands your lending options best.

The skills and relationships developed by your broker over time – will help you get the capital your business desperately needs today. Brokers spend a lot of their time cultivating relationships with lenders, as a result they get to know and understand what is needed for a successful application. Requirements for due diligence, approval, how risk adverse a lender is and what the timeline for funding will be, will all work in your favour and are part of what your broker can bring to the negotiating table.

Benefit from Extensive Knowledge and Expertise.

Would you trust your automobile repair work in the hands of an insurance agent? Would you have your roof replaced by a tax accountant? The answer is absolutely not – the right professional should be hired for the right job. When it comes to your business financing needs, you want a professional who understands your industry and who can navigate the credit-granting system with ease. Financial contracts and application processes can be challenging if you’ve never encountered them before. Your broker will be familiar with the terms, acronyms used, and the general process your business will be subject to when you apply for financing.

Get a Customized Solution.

A customized solution is key to your success. Your business is not the same as anyone else’s and your lending needs are unique too. Your Commercial Finance Broker will develop a custom solution for you. Your business needs will dictate the type of financing you’ll require. The benefit of a customized solution and support that is tailored to your needs – you’ll get the best rate and terms for your business. Your broker will help you compare rates and terms, making it easy to decide how to proceed.

Get Funding Without Assets.

Your bank may rely heavily on what is referred to as “traditional” or “hard” assets. Real estate and equipment are typically used to secure a loan for business purposes with an aim to increasing the risk for you – by reducing the risk for your bank. If you don’t have assets to “secure” to your loan, you’ll need a plan B.

A Commercial Finance Broker can work with your business model, even if it involves shipping goods overseas, or is generally an “asset-light” operation. Unique circumstances that your broker will consider include royalty financing, patent financing, trademarks, copyrights, intellectual property, and executory contracts. Lenders are also adapting, offering more cash flow solutions to asset light businesses, including mezzanine financing, equity financing, and even fully unsecured loans. Your broker will know who to approach, and how to successfully approach them.

A Commercial Finance Broker can be your biggest asset, and your most valuable business resource.

You can save a lot of time and money by working with the right expert for your needs. While someone else is working out the details and navigating the lending process for you, you can focus on growing your business and generating revenue. One of the biggest reasons for declined financing applications is inexperience in knowing what is required for a successful application. By hiring an expert to help, you can rely on their experience. Your broker will know which lenders to approach, how to make sure you’ve got the right documentation to make your application, and even how to get around some of the “red tape” that adds time to the application process. Your broker will also work to get you the best terms possible – because they can see your long-term game plan and they want to help you meet your business objectives.

Let Spergel Corporate Finance Help Your Business.

A Commercial Finance Broker will have developed and maintained key relationships with a variety of great lenders. Connecting the right businesses with the right lenders can elevate a broker to a valuable place in the eyes of the lenders they work with. Cultivating respect and appreciation for developing the best solutions for everyone means that many lenders rely on their broker network to provide valuable business leads. As a third party in the ongoing deal, your broker will be the impartial and objective party in negotiations, resulting in what is fair and appropriate for everyone concerned. If you think that the assistance of a Commercial Finance Broker sounds like the right choice for your small or mid-sized enterprise, please contact Spergel Corporate Finance today. We would be happy to review your business needs and assist you in securing the financing that you need.

Our President Glen Dalzell explains how Term Loan financing can help you fund the purchase of key assets over time.

What is a Term Loan?

A Term Loan is a financing solution that allows you to pay for an asset over time rather than in a lump sum. Too often, businesses deplete their most valuable asset (CASH) purchasing a high-cost asset that could easily be financed over time. A general rule in financing, “Use short term financing to purchase short term assets” (i.e. cash to purchase inventory) and “long term financing for long term assets” (i.e. term loans for machinery and equipment that has a long life). This preserves cash flow while providing the company with the production capability to pursue future business opportunities. The client identifies the asset and the lender (i.e. bank) purchases it and advances the funds in a single lump sum to the vendor and then enters into an agreement with the client to pay back the principal and interest over a period of time (typically 2-10 years).

What is a Term Loan Ideal for?

A term loan is ideal for purchasing new machinery and equipment, to finance a new location, acquisition or leasehold improvements. Assets such as machinery and equipment or a new location can be integral to your business’ growth and competitive edge. The cost of these types of investments can be substantial. Generally, a business will not have sufficient surplus cash or credit available to fund the outright purchase. Term loan financing will help your business retain cash while providing the assets needed to expand. If financing a large purchase from your own resources is not a viable option for your business at this time, we can help you arrange financing to pay for your purchase over time.

Term Loan Financing – The Benefits

• Term loan financing improves cash flow-beginning with the benefit of improved cash flow. Operational cash can be diverted to other areas of the business while a term loan finances the investment and reduces the impact on cash flow.
• Term Loans are flexible – depending on your company’s “credit-worthiness”, you will have varying degrees of flexibility on the terms of your financing deal (i.e. interest rates and amortization period)
• Term Loans can lead to other credit-If you regularly repay your term loan on time your loan history becomes a positive example of your creditworthiness and improves your credit score. As your score improves, you become more attractive to new lenders and other financing opportunities may become available – possibly even with better interest rates.

Term financing is a great alternative to using working capital to solve a business cash flow challenge. If you think that a term loan would be beneficial to your business, Spergel Corporate Finance will be happy to connect you with the appropriate lender. Let us help you meet your business objectives.

Receivable Financing / Invoice Factoring for Construction Sub-Contractors

Spergel Corporate Finance (SCF) President Glen Dalzell explains that invoice factoring for the Construction Industry can help your business fix cash flow problems and raise immediate funds. Factoring is a financial solution used by companies in many industries to solve cash flow challenges by converting their accounts receivable into cash. Historically, it has been difficult, if not impossible to factor construction receivables due to the industry norms of construction holdbacks, progress draws and construction liens. These potential issues have caused most factoring companies to avoid the construction industry altogether. In order to successfully finance clients in this industry, the funder must be a specialist that knows the ins and outs of the business. Until recently, this type of funder was simply not available in Canada. SCF has recently established a relationship with a funder that is an expert in financing construction receivables.

What Is Construction Invoice Factoring?

Construction invoice factoring is a financial transaction that allows construction companies to sell their current invoices to a third party factoring company in exchange for immediate cash. It is common for construction sub-contractors to wait up to 90 days for payment from general contractors and commercial clients. By factoring their invoices, sub-contractors can eliminate this nagging cash flow problem by receiving immediate payment for outstanding invoices. This allows them to move on to the next job with the working capital needed to make payroll, purchase materials and pay bills on time.

What does a typical construction industry client look like?

• Early stage start-ups that do not yet qualify for traditional bank financing.
• Rapid growth companies that need more working capital than their bank can provide.
• Organizations facing financial challenges that disqualify them from traditional bank financing.
• Annual sales greater than $1 million (monthly receivables of at least $100,000).
• Diverse customer base with no more that 30% concentration with any one general contractor or commercial customer.

How Does it Work?

• Sub-contractor presents invoices for completed work that have been signed off by the customer.
• Initial advance of 75% of the face value of the invoice is paid to the sub-contractor by the factor.
• Sub-contractor selects which invoices to factor and when.
• The customer pays the factor directly or submits payment to a control account at the sub-contractor’s bank.
• Once the payment is received from the customer, the sub-contractor will receive the remaining 25% less the factoring costs.
• Factoring does not show as a debt on the balance sheet. It is simply a conversion of accounts receivable into cash.

Qualifying for Invoice Factoring

A general lack of understanding of this process may stop many business owners from considering invoice factoring. However, it is very simple and not difficult to qualify. We work with industry specialists in factoring construction receivables. There are no long-term contracts, no monthly minimums or penalties for non-usage.

Should you use Invoice Factoring?

Is invoice factoring the right fit for your construction business? There are many benefits to invoice factoring for construction industry sub-contractors. It gives them the ability to offer customers payment terms up to 90 days without damaging their cash flow. Simple qualification requirements make applying a cinch. Factoring is also a very flexible option for business owners – they only need use it when they need it. If you would like to discuss Construction Invoice Factoring, please contact me directly at the coordinates below. I would be pleased to speak with you.

The Spergel Corporate Finance Advantage

At Spergel Corporate Finance we are dedicated to helping businesses achieve their goals. We act on their behalf, sourcing the appropriate funder(s) to maximize proceeds while minimizing costs. We want to provide the peace of mind of knowing that you don’t have to worry about running out of the cash necessary to run your business effectively. We guarantee fast service, an easy to follow fee structure, no long-term contracts and financing that is customized to fit our clients’ needs.

Learn Why ABL May Work For Your Business From Our President, Glen Dalzell

In a business financing climate where access to working capital can be challenging, customized, non-traditional financing solutions are a practical alternative for business owners. Financing options don’t end with the typical lenders you might expect (i.e. banks). Asset Based Lending (ABL), for example, is one financing solution that a business can use to increase its access to working capital. What are the advantages of ABL financing?  

• First, ABL funders are highly specialized experts in this type of lending and will consider all assets on a company’s balance sheet. ABL facilities will finance a company’s accounts receivable (often at higher advance rates than traditional funders) and provide leverage against other assets including inventory,
• machinery & equipment and real estate. Whether your business has some or all of the above assets, an ABL facility can be structured to fit your needs.
• Second, even early-stage companies can take advantage of ABL. Asset based lending is possible for most business sizes and at any point in their life cycle. Generally, institutional ABL Lenders operate at the higher end of the spectrum (minimum $10 million facilities) but many other non-traditional lenders offer facilities starting at $1 million.
• Third, the “true” value of your assets will be considered. Banks do not typically perform a comprehensive valuation of your assets. Generally, bank facilities are driven by ratios, covenants and cash flow considerations. For ABL financing, asset categories will be individually valued. Appraisals are common for inventory, equipment and real estate to determine the realizable value of the assets. This determines the maximum leverage that the lender can provide

ABL financing is simpler than you might expect. The cost of financing, asset margining, appraisals and the day-to-day mechanics of how it works will be explained to you in detail so that you know exactly what you are committing to. ABL is not complicated and will likely result in an increased amount of working capital financing than your business would be entitled to with a conventional bank operating lines At Spergel Corporate Finance, we work with a variety of ABL lenders in both Canada and the US. Depending on your needs and the type of assets on your balance sheet, we will involve the appropriate lender(s). If you are interested in learning more about Asset Based Lending, please contact me directly. I would be pleased to speak with you.