Corporate/Business Funding exists to personally match applicants with the right funding source for their needs. Each company's needs are unique and we choose from many financing techniques to structure a solution. It's a custom approach, not a one size fits all.
Our clients include: manufacturers, distributers, business service companies, health care industry, importers and exporters and other businesses with annual revenues of at least $1,000,000, and who are unable to maintain or secure the capital they want or need at a commercial bank.
A flexible and customized approach to financing the growth related challenges faced by entrepreneurs.
Asset based lending is designed to give entrepreneurs access to the working capital that's tied up in the following three asset classifications on their company's balance sheet.
1. Accounts Receivable
By borrowing against these current assets, management is able to generate cash sooner than if it had to wait for inventory to become accounts receivable, and for accounts receivable to become cash. Wholesalers, retailers, distributors, manufacturers and service companies can all benefit from the use of our revolving credit facility.
An asset based loan is generally priced low because it is generally offered only to high quality companies with a responsible base of business.
A revolver allows a borrower to borrow, repay and reborrow as needed over the life of the loan facility.
One component of senior debt is a term loan. This is typically an asset-based loan that is based on a certain percentage of the orderly liquidation value of the machinery and equipment and the appraised fair market value of the land and buildings.
Asset-based loans against equipment and real estate are often made in the form of term loans that include regular periodic payments of both principal and interest in order to retire the debt at a fixed maturity date. Asset-based loans using real estate as collateral have longer maturities than equipment loans because of the generally shorter economic life expectancy of equipment.
Asset-based loans are secured by a wide variety of assets. Businesses can borrow money, using collateral such as accounts receivables and inventory or fixed assets such as plant, property and equipment. Asset-based loans also can include equipment loans and real estate mortgages.
Companies in an array of industries and at varying stages of their lifecycles use asset-based loans for a multitude of reasons including mergers and acquisitions, debt refinancing, capital expenditures, working capital, leverage buyouts and even employee stock ownership programs. Asset-based loans offer flexible financing solutions for the following uses:
Working Capital: The assets available to apply to a business' operations are considered working capital assets. At times, working capital loans are needed to bridge financial gaps during the lifecycle of a business. Working capital loans can be secured by a variety of asset types, including accounts receivable, inventory, equipment, and/or real estate.
Acquisition: To grow a business, a company may look to acquire a strategic partner or even a competitor. Asset-based financing is often an efficient means to obtain funding for business acquisitions.
Turnaround Financing: Turnaround financing is often used by under-performing businesses that are not achieving their full potential. In some cases, it is used for businesses that are either insolvent or on their way to becoming insolvent. Asset-based lenders are accustomed to the bankruptcy process and asset-based financing is ideal for turnarounds because of its flexibility.
Capital Expenditures: Capital expenditure is the money spent to acquire and/or upgrade physical assets such as buildings and machinery. Capital expenditure is also commonly referred to as capital spending or capital expense.
Debtor-in-Possession (DIP) Financing: Debtor-in-possession (DIP) refers to a company that has filed for protection under Chapter XI of the Federal Bankruptcy Code and has been permitted by the bankruptcy court to continue its operations to implement a formal reorganization. A DIP company can still obtain loans, but only with bankruptcy court approval. Asset-based lenders also provide exit financing or confirmation financing to companies coming out of bankruptcy.
Growth: Typically, as a company grows so does its need for financing. Also, as a company's collateral grows, its assets can strengthen its ability to borrow. An experienced and creative asset-based lender can assemble a credit facility that can scale to grow with a company.
Recapitalization: Recapitalization is the process of fundamentally revising a company's capital structure. A company typically might recapitalize due to bankruptcy or replacing debt securities with equity in order to reduce the company's ongoing interest obligation. A leveraged recapitalization typically achieves just the opposite—by taking on a material amount of debt, the company increases its ongoing interest obligation but is able to pay its shareholders a special dividend. Bank of America Business Capital has extensive experience guiding businesses through the stages of recapitalization.
Refinancing/Restructuring: When a company enters or exits a growth stage, refinancing or restructured financing may be key to creating a capital structure that better meets the needs of the company. This type of financing is often used for market expansion, completing an acquisition, restructuring operations, or following a successful corporate turnaround.
Buyout: A buyout is the purchase of a controlling percentage of a company's stock. In a leveraged buyout (LBO), the acquiring company uses the minimum amount of equity to purchase the target company. The target company's assets are used as collateral for debt, and its cash flow is used to retire debt accrued by the buyer to acquire the company. A management buyout (MBO) is an LBO led by the existing management of a company. Most LBOs are also MBOs.
Leveraged ESOP (Employee Stock Ownership Plan): A leveraged ESOP is one of many corporate finance alternatives that provide significant tax incentives to both business owners (potential deferral of capital gains) and ESOP Companies (potential exemption from federal income taxes). ESOPs can be used not only to finance stock purchases from existing shareholders, but also to facilitate corporate transactions such as management buyouts, acquisitions and divestitures.
At the end of the funding process which takes about 14-20 business days you’ll have business credit lines established with about 3-5 banks. This allows you to accomplish several important steps which are extremely beneficial for your business both in the short term and long term.
First, it enables you to protect your personal credit since all the purchase activity, payments and debt you may carry on your business credit lines only report to the business credit reporting agencies.
Secondly, it helps you establish your company’s credit reports and scores with the major business credit agencies such as Experian Business, Equifax Small Business and Dun & Bradstreet. So, in the future when you want to apply for additional funding; banks, lenders and suppliers will now be able to check your company’s credit rather than relying on your personal credit.
Finally, with multiple business credit lines established your business will be in a position to obtain credit limit increases every 6-12 months whether it’s from automatic account reviews or by request. In addition, with multiple banking relationships, banks will compete for your business with ongoing balance transfer offers and additional credit products.
If you have an existing corporation we can review it and advise you on what it will take to get you funding, etc. We can bring your existing corporation to where you need it to be to move your business to the next level and beyond.