What Is An Asset Based Loan?

What Is An Asset Based Loan?

Huntington Beach, CA: The term asset based loan is widely used to describe a loan secured against an asset of value as security for the money borrowed. Huntington Coast Capital has been securing asset based loans for our clients in California and across the nation since 2010. Asset based loans consist of loans secured by commercial real estate, inventory, accounts receivable, purchase orders or equipment. Below is a brief summary on how we have assisted our clients in securing asset based loans in California and across the United States in these different categories.

  1. Commercial and investment real estate. Companies that lack sufficient business collateral are often required to pledge outside collateral as an abundance of caution in this type of asset based loan. Often referred to as bridge loans, these loans usually have terms of 6 months to 3 years and are offered through private money capital providers. These asset based loans are offered in California and throughout the country.
  2. Inventory loans. For companies in the manufacturing, distribution, wholesale and retail spaces, inventory represents cash tied up in goods for sale. Inventory can be used as security in an asset based loan. Depending on the type of inventory however, a loan may not be available. For example, if a company is selling fresh fish, meat or poultry, finding an asset based loan will likely not be possible due to the quick turn of this type of product and the potential for spoilage. Other forms of inventory such as t-shirts, tires, dried goods and other products with long shelf lives have a much better chance of being accepted as collateral for an asset based loan.
  3. Accounts receivable and purchase orders. These two assets represent an amount owed and an order for shipment. Both of these asset types qualify for an asset based loan. In fact, these two asset classes are the most popular asset based loan being requested from our clients in California. Companies in search of improved working capital utilize their accounts receivable as collateral for an asset based loan and their purchase orders as collateral when looking to obtain funding to cover their cost of goods to suppliers.
  4. Equipment loans. Asset based loans used to purchase or refinance equipment are for a specific purpose. Retail sector companies such as restaurants are big users of equipment loans as well as companies in the manufacturing sector. Often times in business acquisitions, equipment loans provide a portion of the funds required for the purchase if the equipment is currently owed free and clear and has a usable life of over 10 years.

Asset based loans are vital to the economy and provide funds to companies when more traditional finance programs can not meet the need. If you are a California company in search of an asset based loan or are located anywhere in the continental United States and looking for financing to take advantage of growth opportunities, consider an asset based loan.

Need assistance navigating the capital markets? That is our specialty and we are eager to help. For advise and counsel on asset based loans or any other form of business financing, give us a call 714-719-8966.

To your success!

Patrick Zazueta
Huntington Coast Capital, Inc.

Business Loan For Dickey’s BBQ $40,000

Business Loan For Dickey’s BBQ $40,000

Huntington Beach, CA: A franchise owner for a national chain known as Dickey’s BBQ (the largest BBQ franchise in the country) came to Huntington Coast Capital for a business loan. The loan amount needed to replace and upgrade a Point Of Sale system for the business and consolidate debt was $40,000. At this loan amount, most traditional lenders shy away and opt for financing the larger requests over $150,000.

The franchise owners found it difficult to obtain financing from their local bank. They were introduced to a number of consultants that were not in the capital markets specializing in business loans and wasted a lot of time searching for the elusive capital. Huntington Coast Capital was introduced through one of our affiliate partners and tasked with securing the funding they desperately needed.

After a couple of inquiries, we were able to secure the business loan for their franchise. By utilizing this debt, they are now able to upgrade their systems and restructure their debt at more favorable terms.

Could your company use a business loan? Huntington Coast Capital secures business loans in our home town of Huntington Beach and nationwide. We look forward to serving your business loan needs.

To your success!

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

Why Do Most Business Owners Struggle To Get Bank Financing?

Why Do Most Business Owners Struggle To Get Bank Financing?

Disappointed Business Owner

Huntington Beach, CA: According to Bloomberg, 80 percent of small businesses fail within the first 18 months. Some fail because their products do not fit current market needs, others because they do not adequately differentiate themselves from established competitors, and others because they do not effectively communicate value propositions to consumers. Of course, startups would in many cases be able to fix those problems, if only they had time.

The Increasing Difficulty of Securing Funding

Although business owners have access to a wider variety of financing options than ever before, finding capital is becoming increasingly difficult. Referencing a survey of small business owners–The Small Business American Dream Gap Report–Levi King (CEO of Nav), writes in Entrepreneur:

“Within the previous year, the survey revealed, 20 percent of the small businesses surveyed said they had considered shutting down, primarily because of lack of growth or cash-flow issues.”

Why Businesses Have Difficulty Obtaining Bank Loans

Banks fail to approve small business loans for a variety of reasons, including the following:

  • Poor credit history: the personal credit threshold for many business loan products is around 660; banks typically have a higher score threshold of around 720. Traditional banks and some privately-owned finance companies have a preliminary scoring system based on running a credit check on the individual’s credit first. This is the first hurdle in getting approved for a loan. Poor personal credit most often stops the review process before any real underwriting has taken place on the business.
  • Time in business: the magic number for time in business is 2 years. Why is this? Because most businesses fail within this time period. Not only is time in business important, but also profitability. It is not good enough to simply be in business for two years. Banks look to see at least two consecutive years of profitability on the business tax returns. Business tax returns are the most conservative numbers for the business (because of the natural tendency to keep profits down to avoid paying taxes), and thus, are the numbers used when applying for a bank loan.
  • Historical Debt Coverage: banks frequently fail to approve loans because business owners do not have the necessary debt service coverage for the loan when they apply. Banks look back in time when determining whether or not the business can afford the debt. This in contrast to looking at projections and possible increase in profitability as a result of using the funds provided from the loan to grow the business.

Are There Any Financing Options Other Than Banks?

Fortunately, there are forward-leaning companies that help businesses secure financing. These groups are private funding companies providing asset based loans and working capital products with fewer restrictions and qualification hurdles to jump through. These companies are the cavalry to the rescue for many business owners. Without the second tier, private money programs in the marketplace, many more business owners would have to close up shop. Connecting business owners with this second tier market is what Huntington Coast Capital was formed to do. We are on the side of business owners and help them navigate the secondary markets when the banks say, NO!

Conclusion

Companies like Huntington Coast Capital succeed for 3 principal reasons:

  • We are unbiased in providing business loan options and comparisons;
  • We serve a broad range of industries; and
  • We specialize in securing loans for businesses that have been turned down by the bank.

If you’ve been turned down for a bank loan and want to learn more about our innovative financing options, contact us today.

Sources:

Entrepreneur: Five Reasons 8 Out Of 10 Businesses Fail

Entrepreneur: The Real Reason Banks Deny Loans to Many Small-Business Owners

Nav: Nav’s Small Business American Dream Gap Report Reveals Surprising Reason Many Loan Applicants Get Denied

Business News Daily: 6 Factors That Keep You from Getting a Small Business Loan

Huntington Coast Capital: Why Us?

Huntington Coast Capital Arranges $50,000 Equipment Loan

Huntington Coast Capital Arranges $50,000 Equipment Loan

Huntington Beach, CA:  Huntington Coast Capital arranges a $50,000 loan to purchase new equipment. A client in the snack food distribution business was growing quickly and needed new equipment to meet demand. The company has been in business for 3 years  and although they started with $2,000,000 in equity (primarily invested in existing equipment), they were showing a loss from operations.

This type of loan request is difficult for a few reasons: 1) losses the company is showing on their financial statements, 2) size of the loan. Most lenders are not interested in providing loans of this size, 3) the majority of lenders would not consider the loan on a stand alone basis, 4) most lenders need outside collateral and/or the banking relationship to provide a loan of this nature.

After a fair amount of trial and error from both our funding sources and independent research performed by the company, we found a solution.

The $50,000 loan will allow the company to purchase 2 new label machines that are needed to meet the schedule of the new contracts rolling out this year. These new contracts total over $4,000,000 in gross sales over the next 12 months. A relatively small amount of capital will enable the company to make a big difference to their top and bottom lines.

If your bank is making you feel insignificant, give us a call 714-719-8966. We specialize in securing loans for requests and companies of all sizes. Equipment loans are just one category of asset financing we focus on. Whether you’re in need of general working capital funding, tenant improvements and expansion funding or purchase order financing, we can assist.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.

HCC Funds $1,300,000 In Business Loans In The Month Of December

HCC Funds $1,300,000 In Business Loans In The Month Of December

Huntington Beach, CA.  During the month of December Huntington Coast Capital secured a $650,000 equipment loan and two SBA loans for $500,000 and $150,000 for a total of $1,300,000 in business loans! The scenarios are outlined below:

  1. $650,000 equipment loan for a southern California contractor – The company was paying a high rate of interest on the equipment they used in their day to day operations – The high cost of financing was impacting their cash flow. They engaged Huntington Coast Capital for their equipment loan needs and we were able to reduce their financing costs by almost half, saving them thousands in monthly finance expense.
  2. $500,000 SBA loan for a growing company in the stencil business – The company produces custom stencils for any design and application. The company had an existing SBA loan and were looking to borrow an additional $350,000 to purchase additional equipment to meet growth demands. Huntington Coast Capital secured a $500,000 SBA loan to cover the equipment costs and refinance the existing SBA loan.
  3. $150,000 SBA Express Loan for a custom glass manufacturer – An established custom glass manufacturer was looking for additional funds for advertising and marketing to break in to new markets and broaden their customer base. They have a profitable business serving general contractors and are looking to expand in to direct commercial work.

Whether your business loan needs are for equipment purchases, inventory or general working capital demands, we can assist. We serve companies of all sizes from startup to established.

Business Loans And Knowing The Right Mechanic

Business Loans And Knowing The Right Mechanic

Huntington Beach, CA: My trip to the mechanic made me think about why it is important to have a business loan broker in your corner.

My car recently started misfiring and I took it to the local, large regional mechanic shop (name held anonymous out of professional courtesy) to have them take a look at it. This particular mechanic occupies a lot of space in a high rent district, offers coffee and cookies in the waiting area and an overall professional and sterile atmosphere. The mechanic bays where the specialists operate and solve problems for sick cars looks like it was created by Boeing itself.

After the expert diagnosis was delivered (my car needed new spark plugs and two ignition coils replaced) they provided the cost estimate. I thought to myself, “this is going to be steep” and I wasn’t disappointed. Total cost $682.17. Seeing that I need my car and can’t go more than a few hours without it, I reluctantly agreed. Their courtesy shuttle drove me home and would later pick me up.

When I returned to the shop, the mechanic came out and said, “your car is all done, but you really should replace the other ignition coils and your timing belt is showing cracks and can break at any second.” He went on to say, “the timing belt is a big expense costing roughly $1,200 and then of course the cost of the other coils would bring use to around $1,800 with labor.” I said I would bring it back as I needed to pick up my kids from school.

As I was driving to my kids’ school, my head still in a fog having gone through the surreal experience of knowing that you are not getting the whole story, but not having the knowledge to know for sure, I remembered my trusted Volvo mechanic. I went to this fancy mechanic because they can service the car the same day and I was in a urgent need to have my car back. Now that I had the time, I called my Volvo specialist and booked an appointment.

He replaced the timing belt and also took care of some other minor repairs that weren’t urgent but nice to have done (one of running lights was out, there was a slow leak in my right front tire, and an issue with the passenger side door handle). The short story was that all these repairs had a total cost of $365.00! This was the timing belt that was going to cost me $1,200 according to the fancy mechanic. By the way, the other engine coils didn’t need to be replaced and if they happen to misfire, you can take the car in at your leisure within 100-200 miles of running the car like that. Quite a different story than the high priced mechanic gave me.

Where am I going with this? I saved a few bucks and that is a great win for me personally, but what does it have to do with securing capital and business loans? A lot actually. You see, the high priced guys would never tell me about their competitor working out of a little industrial box charging 1/3 the cost. They would never tell me that replacing the other ignition coils wasn’t necessary (on the contrary, they urged me to). I saved a lot of money by remembering who else was out there, offering similar service and quality work for less.

Business owners in the market for equipment loans, purchase order financing, SBA loans or any other type of loan often enter the process blind. This exposes them to being taken advantage of and subject to convincing, yet biased, opinions of how to handle their funding needs. Direct lenders are experts at explaining the benefits of their financing, but would never tell you where to go to get a competitive quote.

As unbiased business loan consultants, we provide our clients with the confidence to explore their funding needs knowing that we, with our industry experience, knowledge and contacts, are working on their behalf. Do you know if you are about to pay three times more than you should? Is the loan structure being offered by your lender truly the best for your business?

Save yourself the time, energy and frustration of exploring your business loan options and leave it to us. We work with business owners and funding sources on a daily basis and have our fingers on the pulse of the debt markets. Give us a call and let us discuss your capital needs 714-719-8966

To your success,

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.

Huntington Coast Capital Is Off To Its Best Start Ever In 2016!

Huntington Coast Capital Is Off To Its Best Start Ever In 2016!

2016 has started out in a full sprint for Huntington Coast Capital. Through the first four weeks of the year, we have secured $11,300,175 dollars in working capital business loans for our clients. This volume represents the fastest start of any year since our first full year in operation in 2011!

The loan mix was varied and breaks down as follows:

* $5,500,000 business loan for a distributor of private label pastas, spices, and mixes secured by the company’s accounts receivable and inventory.

* $3,200,000 construction loan for a ground up development project in San Diego, CA.

* $100,000 SBA loan for a product development firm.

* $500,000 business loan for a auto transportation company.

* $2,000,0000 business loan for an importer of suits and formal wear for men.

Huntington Coast Capital is pleased to have secured funding for these clients! In each case, the client was in need of a creative business loan to grow their business. The business loan options we brought to the table allowed them to realize the full potential of their company.

If your company could benefit from having a choice of business loan options to choose from, we would like to speak with you! We enjoy playing a small role in insuring that our clients succeed.

To your success!

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