[bdshaw]

I have been asked to help develop a new hybrid product that would offer a combination of advances and factoring. I think the product will be useful in cases where either an advance or factoring alone won’t do the required job for the client. One advantage that will specially help with time is there will not be any subordination not intercreditor agreements required that tend to slow the process down.
I don’t want to put this together on my own. I want, you, the industry to help me structure the program or anything else in the way of comments I would also like to keep the comments here so we all may comment and expand on them.
Thanks, Bob
Advance Credit Funding Corporation
rshaw@advancecredit.com
rshaw@millenniumfundingusa.com
734-929-3800

[omegafund]

A product that may work would be a non-notification bridge loan. Where a merchant has a large order or contract to fulfill. They needs funds for materials or to wait for the invoices to be paid. For whatever reason they cannot go the invoice factoring route and the bank statements don't handle the daily ach.
We have done some inhouse funding for such scenarios but only on the case that the contract was significantly higher than the bridge loan and where margins are 30%+
For example we extended out 25k to merchant that needed to cover payroll and materials waiting on a 150k invoice to be paid. No daily payments no notifying merchants clients. After invoice paid in 30 days we got paid back plus interest and fees.
I know there are lenders that do po funding but most want to be in there with invoice factoringas well. Or the minimum is 250k for LOC
Another time we extended funds to a client as he waiting for LOC to be established. No daily payments but we were paid back in full 20 days later.

I have been asked to help develop a new hybrid product that would offer a combination of advances and factoring. I think the product will be useful in cases where either an advance or factoring alone won’t do the required job for the client. One advantage that will specially help with time is there will not be any subordination not intercreditor agreements required that tend to slow the process down.
I don’t want to put this together on my own. I want, you, the industry to help me structure the program or anything else in the way of comments I would also like to keep the comments here so we all may comment and expand on them.
Thanks, Bob
Advance Credit Funding Corporation
rshaw@advancecredit.com
rshaw@millenniumfundingusa.com
734-929-3800

[bdshaw]

Thanks omegafund.
How about giving me your contact information so we can expand on your post ?
Bob

[Cfairbank]

Bob, we'd potentially be interested if you get this off the ground as we do offer a short term, non-amortizing bullet payment loan product. Repayment just needs to be tied (from a timing perspective) to a contractual payment of some sort -- we don't need to factor anything. We offer loans in 33 states currently.

[RichardGerard]

Love it when people brainstorm.. Seems that this requested product is endeavoring to buy existing receivables (factoring), as opposed to buying future receivables (ACH debits). As long as the credit facility has a UCC 1 on the assets and can in fact possess the paper-the way to do it would be by account sweeps through the client's checking account- and the credit facility must have dial in access to said operating account. Lockbox non notification would not be necessary.

All of the other nuances associated with concentration, industry, retainage, paid when paid, etc. would need to be considered.

As for 'advancing' from contracts etc. as the UCC 1, a relationship with a PO Finance firm that would subordinate could be deployed depending on industry, letter of credit etc..

Seems do-able Bob.. The devil is in the details..

Richard

www.businesscapitalconsultants.com

[bdshaw]

Please allow to define a few terms we use in the commercial finance industry.
PO financiers will finance PO's where our client orders finished goods to be shipped to their customers.If the same
If the same finished goods were shipped directly to our client, that would be inventory.
Finally if our client receives components to be used in the process of manufacturing the finished goods that wood be call WIP, work in process.
Bob

[VFG]

Hey Bob,

I would be happy to assist if you need me on the factoring/PO finance side. Let me know how I can help!