No Business Left Behind!

In today’s credit crunch most business owners across America are feeling left behind. Most of them are telling us that with the recession in full swing they have not been able secure a loan and a new line of credit. Businesses of all sizes have really taken a beating the last 18 months with the meltdown of the global economy, the credit crunch and lack of normal revenue from their customer base. Like the US homeowner that has been unable to continue to pay their mortgages and getting behind with payments the same thing has happen with business owners. They have trouble paying rent or leases, paying their employees, purchasing needed equipment to stay open and with cash flow issues. They are having the feeling of being left behind.

American Finance Solutions (AFS) FAST CASH program was rolled out to assure that “No Business is Left Behind”. With 175 business types 100% pre-approved and another 65 business types 95% pre-approved for AFS’ Fast Cash program. The underwriting process is streamlined and inclusive for this new financing product. Now business owners can have a recent Bankruptcy, liens and a low credit score (in fact credit isn't even considered) and still get approved for FAST CASH.

The FAST CASH product is really more inclusive to those that have been really affected by the present recession. A lot of these clients are good owner-operators that have had some bad luck with not being able to pay bills on time or have had to file for bankruptcy. The FAST CASH product allows these merchants to navigate through some really tough financial times and get caught up on a few bills and get above water.

AFS will fund a business with the FAST CASH product in 24-48 hours and them qualify for between $2,500 to $9,500.

The requirements for FAST CASH financing are as follows:

1. Must process at least $4500 per month in credit cards
2. Have no current cash advance accounts open
3. AFS must obtain a landlord verification and must not be behind in rent more than one month
4. Minimum of 15 credit card batches per month

The business owners who receive the FAST CASH product are not the only ones who benefit. AFS allows the ISO partner agents to keep 100% of all the processing residuals and they also get a great upfront and back end commission on the deal. Merchants who complete three FAST CASH programs are then approved for a traditional cash advance.

SBA's New Floor Plan Program

The Small Business Administration recently announced a new Dealer Floor Plan program to assist car, motorcycle, boat and motor home dealerships secure financing for inventory. This should help many of our clients in this business, but you have to act fast as funds may run out.

Details are as follows:

Dealer Floor Plan (DFP) Financing Pilot Program
Beginning July 1, 2009, the SBA will introduce the Dealer Floor Plan (DFP) Financing. This program offers government guaranteed loans to finance inventory for eligible auto, RV, boat (including boat trailer), motorcycle, manufactured home and other dealerships under a new pilot program that runs through September of 2010. When each piece of collateral is sold by the dealer, the loan advance against that piece of collateral is repaid and the dealer borrows against the line of credit to add new inventory. Here are some of the highlights:

* Size of the loan is $500,000 (minimum) up to $2,000,000 (maximum)
* Borrowers will receive a fee reduction as outlined in the recent changes to the standard 7(a) loan programs
* The maximum guarantee is 75% as opposed to the 90% in the standard program
* The maximum term for the DFP loan will be five years
* Loans will only be made for inventory that can be titled

For complete details visit http://www.sba.gov/floorplanfinancing/index.html

Responsible Use Of The Merchant Cash Advance

At our offices we get calls from business owners everyday asking about how a Merchant Cash Advance works. Nearly all are looking for traditional financing that their current bank or finance partner will not provide. Many of our clients recently had a traditional line of credit from their bank that has been pulled, despite never missing a payment and being a good client of the bank for years.

After explaining that an MCA is not a loan (but actually a sales contract) we get asked what is the rate? The MCA provider is purchasing future revenue at a discount (for example we might purchase $26,000 of future receivables for $20,000 today resulting in a $6,000 discount). Most MCA providers will set the credit card retrieval rate to collect the $26,000 over six or seven months. Doing the math you quickly see that paying $6,000 for access to $20,000 of capital is expensive and approximately triple the rate when compared to traditional bank financing.

The next question always out of the caller is "Why so high?" Answer: A MCA provides a quick, low-doc, uncollateraized business financing when most if not all other financing institutions will not. This high-risk financing carries much high default ratios than typical bank financing and for the MCA provider to stay in business they must make up for these losses in their pricing.

Most business owners love the thought of quickly accessing $10,000 to $150,000 of cash to grow their business. When entering into an MCA contract the client needs to answer two important questions:

1. By utilizing the MCA will I be able to make more profit in the long-run than the cost of the funds?

2. Can my cash flow afford the withholding percentage on my credit card receipts?

If the answer to either of these is no then the client needs to seriously consider the viability of an MCA for their financing needs. Reputable MCA providers are not in business to just hand out cash and make their premium. Rather they are here as an alternative financing partner to help business owners grow or deal with a situation or opportunity while not putting a financial hardship on the business.