What in the Heck is a Unitranche Loan?

Blog articles discussing factoring companies, factoring loans, invoice factoring and all things related.

There is a lot of jargon in the finance world. Some of it sounds confusing at first glance, but upon a closer look, is readily understood. One example of this is what is referred to as a “unitranche” loan. I have included a link to an article that does a great job of explaining what this is in plain and simple English.

A unitranche loan is a term loan that combines both senior and junior components in a single credit facility. Unitranche loans are typically made by a small syndicate of lenders and is documented in a single set of loan documents. Pursuant to these documents, the borrower agrees to pay a blended interest rate on the entire principal amount of the unitranche loan and grants a single lien in favor of the administrative or collateral agent to secure the payment and performance of the entire unitranche loan.

See more http://www.abladvisor.com/articles/4212/unitranche-loans-somewhat-complex-yet-streamlined-and-efficient.

If your business could benefit from additional capital to expand your operations, we would like to speak with you.

To your success!

Patrick Zazueta | Founder | Huntington Coast Capital, Inc. | 714-719-8966

Using a Factoring Company – Does It Work? Is It Good For My Business?

Blog articles discussing factoring companies, factoring loans, invoice factoring and all things related.

Most of the small business owners we speak to would love to be approved for a bank loan or partner up with the coveted “equity investor” and ride off into the sunset. The reality of it, however, is that very few small businesses qualify for traditional bank financing and do not meet the requirements equity investors look for.

There is a gap in expectations between what small business owners want and what private investors and banks want. What are they? Summarized below:

Small Business Owner – “I wish to become wealthy by using someone else’s money at a very low rate of interest and prefer not to personally guaranty the loan.”

Investor/Bank – “I want to lend money in a nearly risk free scenario and gain a handsome return on the capital invested.”

The end result is the “Golden Rule” or those with the gold make the rules. It is not uncommon to reach a stale mate after months of negotiations as a result of the gap created by these polar opposite ideals.

What we have found is that the conversation (if the business owner is looking to fund variable expenses) usually migrates to factoring company solutions or an asset based loan. Why? Because factoring companies provide easier access to capital and focus on your customer’s credit. Does that mean they aren’t concerned with their borrower? Not exactly. Both borrower credit and customer credit are important in the factoring companies eyes, but not to the same degree. If you sell on net 30 terms and invoice your customers, chances are you can obtain the funding you need with a factoring company.

The profile of an average business that is approved for factoring has some of the following challenging characteristics:

– losses and/or negative equity

– business owner not willing to provide a personal guaranty

– start up or under two years in business

– internal financial statements

– tax liens or past due tax payments

– contractor business

– poor record keeping

This is not a complete list, but shown to demonstrate the flexibility of factoring companies over traditional lenders. As your business grows, your factoring charges will decrease as the factor’s main interest is to grow with your business. We have some clients that choose to stay in their factoring relationship for the ease of use and minimal financial reporting requirements.

Factoring companies finance your operating capital needs, manage your accounts receivable and stay out of the way and let you run your business.

If you have questions regarding whether or not factoring is right for you, please call us for a free consultation 714-719-8966.

To your success!

Patrick Zazueta | Founder | Huntington Coast Capital, Inc.