Cash Flow, Growth Money - Business Funding Beyond the Banks
by Debra Maples

The number one reason for business failure in the U.S. today is lack of working capital!

Businesses need money to grow. A business cannot survive just because it has a better product, an exclusive market or the best method of distribution. The catalyst required for progress is money!

But where does a business go when the banks say no?

Asset-Based Lending - What is it and how can it help?

Asset-based lenders play a vital part in financing the economy and are dedicated to the growth and well-being of their clients. They provide their clients with cash by lending on fixed assets, accounts receivable and inventory, and engage in factoring, purchase order financing, real estate financing and leasing. They include the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, factoring organizations and financing subsidiaries of major industrial corporations.

The increased cash availability provided by asset-based lenders often makes the difference between profitable growth and failure for the undercapitalized business. The flexibility and cash flow availability they provide have enabled countless companies to grow and take advantage of market opportunities.

Asset-based lenders most often advance funds when traditional sources are not available. They are familiar with various types of businesses and are responsive to the individual client needs. Whereas, traditional sources, such as banks, usually have a one-size-fits-all attitude.

The phrases, "too small," "too new," and "not enough net worth," do not deter asset-based funders. These lenders are "proactive" rather than "reactive" and can often help with creative structuring of deals to accomplish the goals and needs of their clients.

These lenders - large and small alike - possess the experience and know-how to structure the proper financing program for their borrowers and specialize in financing business transactions covering a broad range of products and services, both domestically and internationally. They understand the ins and outs of the specific industry they deal with. They have made a point of learning the industry and they have also made a point of thinking "outside the box" to accommodate the industry's special needs.

Asset-based lending has always been available to "big business" but is just recently becoming utilized by small business. The business world has begun to realize that the total of "small business" is larger than "big business" and is beginning to work hard to make small business aware of these funding options.

Russell Handley, owner of Test Communications Group in Newburgh, NY installs cable lines for large cable companies. In his industry, it is standard for these firms to take as long as 90 days to pay bills. So Handley uses factoring (only one of the numerous types of asset-based lending - which is the sale of accounts receivable) on occasion and getting money quickly for his invoices allows him to take on more work. In fact, he credits factoring with having helped him increase his annual revenue from $500,000 seven years ago to nearly $4 million today. "We wouldn't have grown as fast as we did without it," he says. (Pofeldt, Elaine. "Raising Capital." Success May 1999.)

Phillip Brach, owner of World Trade Knitting Mills in Brooklyn, NY says, "When you call with a question, you don't have to wait days and weeks for answers from the president and vice president," he says. He also credits factoring with allowing him to increase his production and sales by about 25 percent in two years. (Pofeldt, Elaine. "Raising Capital." Success May 1999.)

Some banks are actually beginning to send clients they reject to asset-based lenders. They have decided it is in their best interest to refer their business to someone who can help the client. Then, when the client grows to the point where he is bankable, they feel he will be inclined to stay with them and borrow from them.

The cost is influenced by the credit risk and collateral associated with the transaction. Again, no one-size-fits-all concept or mindset!

When evaluating an asset-based loan, borrowers should consider the cost of financing in the context of the benefits to be received rather than on the stand-alone basis. Compared with other financing alternatives, asset-based lending is very cost effective and efficient and is there "when" you need it to take advantage of profit opportunities in the market. Asset-based lenders are also responsive to the urgency of a business' cash needs.

Some of the options available through asset-based lending are:

Accounts Receivable Factoring
Bankruptcy-Reorganization
Construction Funding
Credit Card Receipt Advances
Expansion Financing
Equipment Financing
Franchise Financing
Import and Export
Inventory Loans
Equipment Leasing
Purchase Order Financing
Real Estate Financing
Secured Credit Line
Unsecured Credit Line
Venture Capital
Royalty Funding


Debra Maples is a certified cash flow consultant who counsels companies and sometimes individuals on turning virtually every type of cash flow, income stream, debt instrument, or private paper asset into cash. Debra's specialties include: Solving cash flow problems with financing techniques banks don't offer; Accounts Receivable factoring; Pre-Settlement Lawsuit financing; Business Note financing. Debra is available to assist you with the structuring, purchase, or sale of real estate notes and any other negotiable paper instrument. She can be reached at (225) 247-4370. For additional information, see Debra's website at yourcashflowconnection .

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Copyright 2004 by Debra Maples. All rights reserved.

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