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03-12-2018, 07:08 PM #1
- Join Date
- Dec 2014
- Location
- Quogue, NY
- Posts
- 1,108
What you are describing is a standard bank revolver. They create a limit with which they lend interest only. Typically they have a one month 'clean up'. If you are able to pay off your principal balance, they extend the revolver for another year- if you cannot- they 'term' out the principal and interest..
This is standard C and I bank practice- so virtually all banks do this. They will typically require that the borrower switch corporate and personal accounts to their institution as well.. Issue is that banks typically do NOT provide enough liquidity. $23M a year and only 350k!!!
At $2M per month (depending on the business and asset types) the client is just about ready for a $4M ABL facility where applicable
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03-12-2018, 07:15 PM #2
- Join Date
- Jan 2014
- Posts
- 1,366
I Have tried speaking to him about ABL and invoice factoring almost all his revenue is invoices but he is stern on what type of program he wants. I am thinking because he is an older merchant and has been using that revolver for quite some time just does not feel comfortable making the change.
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03-12-2018, 07:22 PM #3
- Join Date
- Dec 2014
- Location
- Quogue, NY
- Posts
- 1,108
Many clients are concerned about the difference between and ABL LOC and factoring- big difference. Factors PURCHASE the invoices and have a right to contact the payers and route payments to a third party. ABL LOC's do not contact the clients and do not collect payments.
Perhaps an ABL facility written by a bank would satisfy the client..
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