Asset Based Loans Versus Bank Loans. Which Is Better For My Business?

Asset Based Loans Versus Bank Loans. Which Is Better For My Business?

Huntington Beach, CA  Our clients come to us with an asset based loan or financing need that almost always is required in order to grow their business. If you are like most business owners, cash flow is tight and if you receive a big order outside the normal course of business, it could be challenging coming up with the cash to cover the cost of goods and deliver the product. Your cash need could also be to finance additional equipment and require an asset based equipment loan in order to meet the increased capacity required to fulfill a contract.

Traditional banking places the emphasis on the cash flow and financial strength of the company, the borrower. They are primarily concerned with how financially solid the company they are lending to is. This is good practice, and it makes sense that the companies that the banks deal with are in good financial health. The obstacle to clear however, is that most companies are leveraged to a high degree and can not meet all of the required ratios banks look for when making a credit decision.

If your company is growing quickly and every dollar is going back out the door to cover ongoing working capital needs, it is likely that you will not meet all the requirements of bank lending. For example, banks look at the leverage ratio of the company. This ratio is figured by dividing the total debt of the company by the equity of the company. Equity being the total assets minus the total liabilities. If you have more than 3 or 4 times the liabilities as you do equity, banks will shy away from offering you more credit for fear that your profits and company cash flow will not be able to pay off the new debt. Again, a prudent way to look at things, but the problem is that most borrowers do not qualify.

The advantage to bank lending is the cost. If your company can qualify, then banks will be able to offer the lowest borrowing rates.

The other option are asset based loans. Asset based loans have a broad spectrum of categories. An asset based loan can be used for commercial real estate purchases, inventory loans, equipment loans and purchase order financing to name a few. In an asset based loan, the lender is looking at the asset being used as collateral in the transaction. For example, if your company received a large purchase order and needs additional cash to pay the upfront costs or deposit required by the supplier, and asset based loan is a good option. The asset in this instance is the purchase order itself. Purchase order financing is often accompanied by a factoring loan. Factoring loans are asset based loans secured by the invoice sent to the customer versus the purchase order sent to the supplier. For more information on factoring loans click here.

In our experience, business owners are qualified for asset based loans more often than bank loans. We explore each option as appropriate and the obvious choice is always revealed in the end. Our clients like the unbiased consultation and industry insight we bring to the table. Because we are not lending our own money and acting in a consultant capacity, we are able to align ourselves on your side of the table and deliver the best options for you and your funding needs. Additionally, in the majority of cases, our services are free to our clients. Our lender network compensates us for bringing them asset based loan opportunities.

If your business would benefit from an asset based loan or equipment loan, give us a call. My direct line is 714-719-8966.

To your success!

Huntington Coast Capital Arranges A $150,000 Unsecured Loan

Huntington Coast Capital Arranges A $150,000 Unsecured Loan

Huntington Beach, CA  Huntington Coast Capital arranged an unsecured business loan for a company offering online teaching credentials. The company is the first online alternative certification program in South Texas to be approved by the State Board of Educator Certification (TEA) , and certifies candidates across Texas in over 25+ certification areas offered in the state of Texas including Career &Technology and Trade Vocations.

The curriculum allows candidates to review courses as many times as they need to, gives benchmark quizzes at specific intervals to ensure students are comprehending what they are studying, and provides the user with immediate feedback to track their progress.  In addition, they have partnered up with companies dedicated to test preparation and have incorporated their material and curriculum to provide their candidates with more opportunities for success.

The unsecured asset based loan was supported and approved due to the positive cash flow of the company. Traditional business loans are more geared to B2B companies with inventory and accounts receivable. Finding a loan proved difficult for the company and they urgently wanted to refinance some higher priced debt.

Through our broad base of lenders, we were able to provide them with a solution. Huntington Coast Capital prides itself on providing business loans to companies who otherwise would not know they are available. Could your business benefit from additional capital? If so, we would like to talk to you.

To your success!
Patrick

Huntington Coast Capital Secures $400,000 Equipment Loan For Southern California Manufacturer

Huntington Coast Capital Secures $400,000 Equipment Loan For Southern California Manufacturer

Huntington Beach, CA  A $400,000 asset based loan secured by equipment was obtained for a long time Huntington Coast Capital client. The company came back to Huntington Coast Capital for some additional equipment loan needs for their expanding business. The assembly line equipment will enable them to meet growing customer orders. The asset based loan secured exclusively by the equipment offered better terms than other equipment finance companies and even the equipment supplier’s terms!

The production manager said, the new equipment will allow us to deliver the additional orders being requested by our customer and enable us to deepen our relationship with them.

Asset based loans are a great way to leverage specific collateral for a loan. Equipment loans and factoring loans are great examples of this. In factoring loans, the asset being pledged is the accounts receivable of the company. Business owners in need of cash flow to sustain operations often turn to a factoring loan for the flexibility, speed and fewer restrictions involved in the loan agreements. When compared to traditional bank financing, asset based loans offer a more user-friendly experience and allow you to grow your business without the bank hassle.

Could your business benefit from an asset based loan? Are you looking for a less complicated lender experience? Through our network of lenders throughout the United States, we have most every business loan request covered. To learn more, give us a call 714-719-8966.

To your success!
Patrick

Huntington Coast Capital Presents At The Cove At UC Irvine Applied Innovation

Huntington Coast Capital Presents At The Cove At UC Irvine Applied Innovation

Huntington Beach, CA  Entrepreneurs from around the southwestern United States came to The Cove Applied Innovation Center at UC Irvine to pitch their business plans in an effort to raise capital from venture capitalists and equity investors. The companies in attendance ranged from pre-revenue, startup concepts to established companies looking to take their business to the next level. A broad range of industries were represented some of which were video game developers, niche apparel companies, foam mattress engineers, craft tea brewers, education service platforms, and airline sanitation concept companies. There were also medical technology companies represented in the area of liver function testing and patient records management.

The energy in the room was high with business owners given either 1-minute or 5-minutes to present their business and plans for the future and the opportunities that existed. The time frames were offered at different ticket price levels. The pressure was on from the beginning as the moderator kicked of the program by stating bluntly, if you can not explain your business and justification for investment in the first minute, the investors will not listen to what you have to say in the second minute! 

After the entrepreneurs were placed in the hot seat to present with hundreds of eyes fixated on them, the panelists were given the opportunity to ask questions about the business to dig deeper to see if an investment opportunity existed. Feedback was direct and pointed as the venture fund and equity groups inquired about the financial details and assessed the likelihood of earning a return on an investment. Investor comments were direct, cold and objective as they assessed the quality of the opportunities being presented.

Huntington Coast Capital was at the program to discuss the other side of business lending, asset based loans. Successfully securing an equity investment for your company is a gratifying feeling. It is an acknowledgement from discerning and critical investors that your business plans have merit and potential. Sometimes, this endorsement and confidence can be supported with investments of over a million dollars!

The harsh reality is however, that very few companies earn the privilege of an equity investment. These equity groups are reviewing upwards of three business investment opportunities per day. I often equate companies looking for an equity investment as sea turtles. Millions are born and sadly only a few hundred make it to open water!

This success ratio can be discouraging. However, when companies can not qualify for an equity investment, capital may be available on the debt side. If you are looking for money to hire staff, complete research and development of a product, market your company or gain inroads to supplier and customer contacts, equity is a great option. Conversely, if you are looking for funds to cover purchase orders or improve your working capital cycle, an asset based loan is a better option. You should not give up equity in your company if all you are looking to do is cover your cost of goods, purchase equipment or increase your inventory to meet demand. These capital expense items are all met with asset based loans.

Huntington Coast Capital specializes in securing asset based loans for companies of all sizes throughout the United States. Our typical funding amount is anywhere from $250,000 to $1,500,000. If you have solicited an equity investment with no success, look in to an asset based loan. We would welcome the opportunity to speak with you about your business goals. Call me directly at 714-719-8966.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.

Huntington Coast Capital To Present At Venture Capital Event At UCI

Huntington Coast Capital To Present At Venture Capital Event At UCI

Huntington Beach, CA: Huntington Coast Capital is proud to be a part of the Orange County Venture Capital Fast Pitch Conference on Thursday, November 30th at The Cove at UC Irvine Applied Innovation in Irvine, CA. Entrepreneurs from around the local and regional area will pitch their business ideas in the search of capital investment. The companies will consist of startup, pre-revenue companies to established companies looking for investment to take their business to the next level.

Huntington Coast Capital will be discussing asset based loans to the largely California-based audience. Venture capital is not necessary for every funding request and perfectly appropriate for others. In a certain circumstances, asset based financing in the form of debt is all a company needs to accelerate their growth.  For example, if your company needs capital to fund the cost of purchase orders, an asset based loan secured by the purchase order and future invoice to the customer, may be all that is required. You do not need to take on an equity partner in the this case and give a portion of your company away. Conversely, if your product or service is having a difficult time breaking in to a market segment due to lack of capital and connections, equity is entirely appropriate and maybe even necessary.

Whether your business needs venture capital or an asset based loan, largely depends on the intended use of the funds being requested. We counsel business owners on the available capital options and provide valuable insight in to the appropriate course of action.

If you would like to discuss how to navigate the capital markets and select the right funding avenue for your business goals, give us a call. My direct line is 714-719-8966 or you may reach us toll free at 844-239-2632.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.

HCC Secures $500,000 Asset Based Loan For A Women’s Apparel Company

HCC Secures $500,000 Asset Based Loan For A Women’s Apparel Company

Huntington Beach, CA A women’s apparel company that started in 2008 was experiencing rapid growth due to increased brand awareness and marketing. The company is in a niche market within the women’s apparel industry. When the company first started in 2008, they were purely an eCommerce company. The company found that they could compete in a niche market and grow much more rapidly if they were not competing in the main stream women’s categories. Because they were largely an eCommerce, direct to consumer company, traditional asset based loans were not available to them. Traditional asset based lending companies loan against accounts receivable and inventory. These two assets on a balance sheet accompany sales to retailers, wholesalers and distributors, not sales directly to the consumer.

The company was profitable, but not to a level that banks like to see. After speaking with a number of banks with no positive results, they decided to engage Huntington Coast Capital. While asset based loans to eCommerce focused companies are not easy to come by, Huntington Coast Capital has a reliable stable of such lenders eager to be involved in the space.

The short story is, we were able to secure them an asset based loan and close in less than 3 weeks from our initial consultation. Huntington Coast Capital secured a $500,000 asset based loan against the general assets of the company. We succeeded where others failed. This asset based loan will allow the company to hit their sales numbers by giving them the capital they need to fulfill the ever-increasing orders.

Could your business use an asset based loan? Give us a call 714-719-8966.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.

HCC Secures $350,000 Asset Based Loan For Social Media Advertising Company

HCC Secures $350,000 Asset Based Loan For Social Media Advertising Company

Huntington Beach, CA: A southern California company providing retailers with a way to socially market their products was growing fast. Huntington Coast Capital secured them an asset based loan on the general assets of the business to take them to the next level.

The company essentially captures happy customers in an onsite Kiosk that takes pictures of them and their friends and shares the message and photos on their social media outlets. A modern way to advertise your business! The products as described on the company’s website are copied here:

We turn event photos into marketing stories

We believe that the best way to spread your brand’s story is to capture a personal photo of your customers. Capturing photos and videos of your customers is the most powerful way to create testimonials and word-of-mouth marketing.

 

As we continue to evolve our technology, we have a few guiding principles:

  • All of our technology is designed for marketing, and the best type of marketing happens when the consumer’s photo tells a story.
  • Photos should be delivered as a gift. For example, Photo Access Cards turn a photo into a physical gift that people put into their pocket and use to retrieve the photo later. No need to ask the consumer for information onsite
  • Different situations require different methods of delivery. We support delivering photos by: email, SMS, handing out Photo Access Cards, handing out a glossy print, through social channels, and with an onsite sharing kiosk
  • Event technology has to be drop-dead-simple to use and bullet-proof. All of our technology can be used in a single location or rolled out to hundreds of locations
  • We have created a system that fits the needs of the most demanding large brands, and can be used by small businesses

Could your business use an asset based loan? We secure asset based loans in California and throughout the country! Call us today 714-719-8966.

Asset Based Loans In California In Demand!

Asset Based Loans In California In Demand!

Huntington Beach, CA: Business owners have been increasingly inquiring about asset based loans in California and nationwide. Frustrated with the banks, they come to us for answers. We have successfully secured loans for inventory purchases, equipment lease and purchase programs, purchase order financing, lines of credit, term loans and SBA loans to name a few. Is your bank making it difficult to get a loan to grow your business? Contact us and explore your options 714-719-8966 or at patrick@huntingtoncoastcapital.com. How far can your business go?

Patrick Zazueta - Huntington Coast Capital - Orange County CA 4 - Half DR

Asset Based Loans On The Rise

Asset Based Loans On The Rise

Huntington Beach, CA Asset based loans are the rise in the second half of 2017. We have seen an uptick in asset based loan requests in California and across the country. The main reason for this, we believe, is that bank credit remains difficult to obtain. For example, SBA loans have traditionally been the choice for business owners looking for asset based loans to acquire another business or to expand an existing one. The SBA is a good option and we have many sources participating in the SBA loan program. However, the is a big IF attached to SBA loans and that is, SBA loans are a good option, IF, you can qualify.

The SBA loan process is stringent and not at all subjective. You either fit in to the credit box, or you do not. There is very little accommodation given for those falling just outside the credit parameters. If you are able to qualify, there is a mountain of paperwork attached that some borrowers do not have the stamina for.

We are seeing an increasing number of applicants opt for the document-light, but more expensive term loan options. There are a crop of lenders in the market place offering asset based loans in California and nationwide. They have grown in popularity due to their quick turn around decisions on credit and their requirement for fewer documents throughout the underwriting process. They still underwrite the cash flow and make sound loans, however, the process is not nearly as tedious.

The reason that SBA loans require so many documents is because they are backed by the government and the lender is partially insured against loss. Understanding this, there are very strict controls in place in order for the bank to receive the insurance on the loan. SBA loans, as stated previously, provide a good option for business owners who qualify, if they can. However, borrowers will need to bring their patience because the process requires a fair amount of endurance.

When working with our clients on asset based loans in California or elsewhere, we always suggest we run two applications in tandem. One through the SBA and another through one of our private sources. This allows them to pick the best option for their needs and provides them with the greatest chance at success.

Could your business use and asset based loans to fund growth? If so, we would like to speak with you. Our unbiased consultation bring the lenders and options to you. We are not a direct lender and as such, we are not “selling” our program. We align ourselves on your side of the table and negotiate on your behalf. Asset based loan, equipment loan, purchase order financing or a line of credit – whatever the need is, we can assist.

To your success!

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

$50,000 Asset Based Loan For A Chiropractic Office

$50,000 Asset Based Loan For A Chiropractic Office

Huntington Beach, California – Huntington Coast Capital secured an asset based loan for a chiropractic office. The use of proceeds was to consolidate existing debt and additional funds for marketing and working capital. These smaller sized loan requests are difficult to be approved under due to the return to the funding source. However, we were able to get two separate approvals, one through the SBA and another through a private capital source. The SBA option was naturally more attractive from an interest rate perspective and the borrower elected that option.

The SBA loan will be an asset based loan with a blanket lien on all of the business assets. The loan was approved due to strong debt service coverage and the borrower’s strong credit score. The term asset based loan is a broad term and can be used to describe a number of different loan products. Some asset based loans are specific to accounts receivable, inventory or equipment and others are more of a blanket loan on all assets of a business, as in our most recent example.

If you business could use an asset based loan to take advantage of growth opportunities, call us! 714-719-8966.

To your success!