HCC Secures Asset Based Supply Chain Funding Line

HCC Secures Asset Based Supply Chain Funding Line

Huntington Beach, CA Huntington Coast Capital structured over $1,000,000 in asset based supply chain funding with three separate providers for an importer/distributor of home saunas.

The primary products of the company are heaters and sauna cabins. The sauna cabins are constructed with quality with either Western Red Canadian Cedar or North American Basswood. The furniture grade cabins are designed to provide you with maximum comfort during your sauna session. Deep, reversible and ergonomic back rests, thicker walls, elegant details, exterior lighting and beautiful craftsmanship are just some of the luxury exclusives found in their saunas. Their heaters feature a high output combination of carbon/ceramic far infrared and full spectrum heaters.

The asset based loan solution: The company sells the heaters and saunas both domestically and internationally. Domestic sales are done primarily online direct to the consumer while international sales are handled through a distributor. The vast majority of sales are domestic and direct to the consumer. The company needed to build inventory to meet demand and grow sales. Demand was further elevated when they partnered with Jacuzzi on their sauna cabins. Jacuzzi, an internationally recognized brand, bolstered the company sales virtually overnight.

Because most of their sales were direct to the consumer, traditional asset based loans would not work for them. Asset based loans most typically require accounts receivable and inventory as collateral and in this case, would not yield the amount of capital they needed to increase purchases from their suppliers.

Supply chain financing has a slightly different approach, but gets the business to the same end, which is additional capital to cover the cost of goods. In a supply chain financing arrangement, the lender pays the supplier and gives the client up to 120 days to pay them back. It is not classified as a loan and as such, can work in conjunction with other asset based loans or bank lines the company may already have in place. It is a clever solution to meet the needs of companies looking for more capital when they are already maxed out with their traditional lenders.

There are a few qualifications necessary in order to be approved for supply chain funding. Namely, the company must have gross revenue of over 10 million dollars, showing a net profit and have positive retained earnings. While certain exceptions are sometimes made, this type of asset based loan is not available to companies in the start up phase of the business. Because it is an unsecured line of credit whereby the lender effectively becomes another vendor on the company accounts payable aging report, the credit history and financial strength of the company must be strong.

Could your company use this form of asset based loan? If so, we would love to speak with you 714-719-8966.

To your success!

Introducing Equipment Finance Quotes.com!

Introducing Equipment Finance Quotes.com!

Huntington Beach, CA Huntington Coast Capital has launched a sister company specializing in asset based equipment loans and lease programs for asset based equipment loan requests of all sizes.

Equipment Finance Quotes (www.equipmentfinancequotes.com) brings business owners and/or their consultants together with the right lender for their asset based equipment loan request. It works by matching the questions asked on the online application with the requirements from lenders on the platform. Once all of the questions are received, a preliminary estimate on the chances of approval is issued. From there, a list of required items is requested from the business owner to complete the underwriting review. If approved, a term sheet is issued by the lender and the business owner and lender are placed in direct contact.

The inspiration for Equipment Finance Quotes.com was similar to what inspired Huntington Coast Capital. We want to simplify the process of finding a loan for business owners. Additionally, we want to not only find the right loan for the business owners request, we want to provide them with some options to choose from and get some lender competition going for their request. Through our online platform we are taking the time, frustration and energy out of the process and providing the business owner with a user-friendly customer experience.

We launched Equipment Finance Quotes.com to handle the amount of equipment loans being received. Our inquiries in this area required a separate platform to better streamline these requests.

If your business could use additional equipment for growth or a line of credit against existing equipment, we would like to hear from you. Please visit us at www.equipmentfinancequotes.com.

To your success!
The Huntington Coast Capital Team.

A Major Obstacle To Obtaining An Asset Based Loan

A Major Obstacle To Obtaining An Asset Based Loan

Huntington Beach, CA  Asset based loans are loans secured by equipment, real estate, inventory or accounts receivable. Essentially, most assets on a company balance sheet can be used as collateral for an asset based loan.

Let us discuss asset based loans secured against equipment and asset based loans secured against commercial real estate. Asset based loans secured against inventory and accounts receivable work entirely different from fixed asset loans.

For starters, lenders in the asset based lending space need to have conservative loan to value ratios. Asset based loans on real estate have loan to values in the 50 to 65 percent range. This is because the lender needs to be able to sell the property and recoup his principle (and hopefully interest) should the borrower default and go in to foreclosure.

Similarly, the loan amount for an asset based loan on equipment is measured by the forced liquidation value. This is not true in most cases, but if we are talking about strictly and asset based loan, it is. The idea behind lending on a percent of the equipment liquidation value is that the lender can sell the equipment at auction should the borrower default.

So, if you own assets free and clear, you should be able to get a loan for 50 to 65% of the assets value, correct? Not necessarily. One item borrowers over look when seeking an asset based loan for the their business is cash flow. They think that if they have the asset, that is all the lender needs. This is incorrect. In addition to having the assets available for collateral, you also have to demonstrate the ability to make the monthly payments. This sounds obvious, but many borrowers initially believe that the asset itself is enough.

Asset based lenders need to be convinced that their loan can be repaid. This was never more apparent than during the real estate meltdown of 2007-2008. Asset based loans against real estate were being made on what was referred to as stated income loans. Or in other words, you tell me how much money you make, I will believe you and then depend on the property value to be high enough to cover my loan should you go in default. This was a very short sided and poor lending practice.

If you can qualify for a million dollar loan to buy a house, it does not mean you can qualify for a five million dollar loan just because the loan to value is there for the asset based loan. Simply put, you still need to make your monthly payments. Sounds simplistic, but borrowers frequently think that having the asset is enough. Well, it is not unfortunately.

Could your company benefit from an asset based loan? Do you have the cash flow to afford to take on the loan payments? Let us talk and see what works.

To your success!

Patrick Zazueta
Huntington Coast Capital, Inc.
714.719.8966

Last Thought On Obtaining An Asset Based Loan (For Now).

Last Thought On Obtaining An Asset Based Loan (For Now).

Huntington Beach, CA There was a recent conversation with a client that I wanted to share because it had to do with asset based loans and what is required to receive one.

This particular request was for the purchase and eventual development of a lot in an in-fill location along the California coast. The asset, raw land with existing income from a billboard on the property, was specially zoned by the City. The basic requirement was that the property had to have a commercial element to it. Of the approved uses on the table were an ice cream shop, bed and breakfast and general retail. The request we received was for the purchase of the land and development of a bed and breakfast.

The land was listed at a price of around $800,000 for a small 2,600 SF parcel. The borrower felt that she could get the price down a bit, but only had a max of $100,000 to put toward the project out of her own resources. She was looking for an asset based loan secured by the real estate. The plan was to acquire the property first, then begin the process of City approval and permits for the bed and breakfast. Sounds easy enough on the surface.

In the last post, I wrote about having the cash flow in addition to the collateral in order to improve your chances on being approved for an asset based loan. There is one other very important piece, and that is, experience. The borrower on this project had some experience in marketing for a bed and breakfast, but no direct operational or ownership experience. This experience is critical to the request and something banks and lenders look at closely when considering an asset based loan. As most people are aware, most businesses fail with in the first 3 years and lack of experience could speed this average up to less than that. In this case, there was also very little, on a relative basis, coming from the cash resources of the borrower. A high loan to value is also not attractive when considering a pure asset based loan.

The three preliminary components to an asset based loan are collateral, capacity and experience. Collateral – is the collateral something of value and interest to the lender? Can it be easily liquidated in order for the lender to be repaid with interest in a reasonable amount of time? Capacity – does the borrower have the cash flow to make the monthly payments on the loan? Experience – if the use of funds are for a business acquisition or development project, does the borrower have experience in the industry?

If you meet these three criteria and are in the market for an asset based loan, we would like to hear from you. To your success!

Patrick Zazueta
Huntington Coast Capital, Inc.
714.719.8966

More Thoughts On Asset Based Loans And How To Qualify For One

More Thoughts On Asset Based Loans And How To Qualify For One

Huntington Beach, CA Asset based loans are a popular alternative to traditional bank loans. Business owners use their assets which typically consist of inventory, equipment and accounts receivable to name a few as collateral for an asset based business loan. However, having the collateral alone doesn’t qualify you for an asset based loan.

What else is needed to qualify for an asset based loan? Cash flow. Many times, business owners spend a good portion of their capital on inventory needed in their business. The inventory is sold to customers creating revenue which turns in to net income after all expenses are paid and the cycle repeats. The problem happens when the inventory is slow moving causing the cash of the company to be locked up in the goods held as inventory. As we know, inventory sitting on the shelf in the warehouse is not creating revenue. It needs to be sold or turned in order to generate cash flow which is the life blood of any business.

Companies that can not demonstrate the ability to pay the monthly payments on an asset based loan will not qualify. One half of the equation is having the collateral, the other half is having the ability to make the monthly payments and afford to take on the additional debt.

Sounds elementary, however, business owners often only look at one side of the equation. Asset based loans can work for both business and real estate purposes, but you have to have adequate income to justify the lender giving you the loan.

If the company does not have the income to cover the asset based loan payments, they will need to seek an equity investment which has a completely different analysis in asset based lending.

To your success!

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

A Word Of Caution When Seeking An Asset Based Loan

A Word Of Caution When Seeking An Asset Based Loan

Huntington Beach, CA Occasionally I feel the need to share some insight in to the capital markets and what it is like working with both clients and other consultants. Obtaining an asset based loan for your business is at times a frustrating process. There are certain consultants in the industry that have their clients sign a fee agreement with them promising a certain percent of the funded amount at closing. This amount can be anywhere from one to five percent of the loan amount.

The problem is, some of these consultants in the asset based lending space, do not have the lender contacts to fulfill the financing their client is requesting. As a result, they come to someone like us to assist in securing the funding.

All of our asset based loan partners, direct lenders, pay us upon the successful close of a loan. We never have the client sign a fee agreement for an asset based loan.

Once the other consultant has their client sign a fee agreement, it can be a burden on the client if they can not deliver the financing as promised. The client looks at them and wonders why they are paying them a fee when their consultant has to go to another broker to meet their asset based loan requirements. A good question.

In these cases, the consultant group that had their client sign a fee agreement, needs to adjust their fee and accept a smaller referral fee in exchange for getting the loan done and doing right by the client. In most cases however, the consultant will guard their client from others and attempt to find what they are looking for through common Google searches and LinkedIn contacts. This wastes time and often causes the client to get exhausted and find an option on their own.

The moral of the story is to choose your broker representative wisely. As a policy, you, as a business owner, should never sign a fee agreement until you know the broker can deliver. We take this out of the equation by having the lender pay us directly upon successful closing of the loan. We never take on an assignment that we do not already have a lender for ahead of time. It frustrates the client and damages our reputation.

Could your business use an asset based loan? If so, we would like to speak with you! You can reach me directly at 714-719-8966.

To your success!

Patrick Zazueta
Huntington Coast Capital, Inc.
714.719.8966

$750,000 Asset Based Equipment Loan Secured

$750,000 Asset Based Equipment Loan Secured

Huntington Beach, CA Huntington Coast Capital secured $750,000 in credit for a company in the trucking industry. The financing was a combination of a $250,000 term loan and an asset based equipment line of credit to be used as needed for new purchases. Like most of our clients, they were growing quickly and needed more money than their existing bank could extend on its own. Through our network of lenders we were able to combine two separate asset based loan programs to meet the funding needs of the company.

The term loan is set at $250,000 while the line of credit will grow with the demand the company is experiencing. Having the right funding partner makes all the difference. Could your business use and equipment loan or asset based loan to reach the next level? If so, we would like to speak with you.

To your success!

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

Huntington Coast Capital Secures $300,000 Factoring Line Of Credit

Huntington Coast Capital Secures $300,000 Factoring Line Of Credit

Huntington Beach, CA  An advertising company is the latest example of our asset based loan success stories! The company specializes in Social Hotspot/WiFi Advertising. Their slogan, WiFi is Smart. Phones are Smart. Is Your Advertising Smart? says it all. Their ability to target the audience of their clients with real time advertising sent to the target customers cell phone, is a powerful and engaging marketing concept. They can target age, gender, interests, location and more, to drill down and put the appropriate ads in front of people that would have the most interest. Targeted mobile marketing is the wave of the future in advertising!

The Challenge: Like most of our clients, they were growing quickly and struggling to keep up with the day to day working capital needs of the company. They needed an asset based loan secured by their accounts receivable to speed up their cash cycle. However, this was a more difficult funding request due to the fact that they bill their customers ahead of services rendered. I would estimate that 99 percent of the asset based loan providers that are lending on accounts receivable need to finance the invoices after the service or product has been delivered. We literally spoke with over a dozen companies to discuss a factoring loan for this client. After several attempts we found success with a progressive and forward thinking asset based loan lender. They secured the working capital loan they needed and can now grow the company without worry of running out of cash to support their growth!

If your company could use an asset based loan for your business or an asset based loan secured by commercial real estate, we would like to hear from you! We enjoy these success stories and would like to feature your business in the next one!

To your success!

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

$250,000 Asset Based Loan Secured For A Music Production Company

$250,000 Asset Based Loan Secured For A Music Production Company

Huntington Beach, CA Huntington Coast Capital secured a $250,000 asset based loan for a music production company. The company is involved in music production, concert promotion and leasing production studio rental units. Under normal course of operations, the company requires large upfront cash out expenditures, especially in the area of concert promotion.

An asset based loan using the company cash flow and limited assets was secured where other lenders had passed. The new $250,000 asset based loan will allow them to grow their operations and take their business to the next level.

Huntington Coast Capital secures asset based loans for commercial real estate and business loan purposes. If your company has been turned down my traditional bank underwriting, try our asset based loan solutions for yourself!

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

Asset Based Equipment Loan Secured For Contractor

Asset Based Equipment Loan Secured For Contractor

Huntington Beach, CA: A demolition contractor needed to purchase some additional excavators for a recently awarded job in West Los Angeles. The contract was awarded and the City wanted them to start within three weeks. This deadline placed enormous pressure on the contractor to perform. If the asset based equipment loan was not secured in time, he could have lost the 4.8MM contract to another supplier.

Huntington Coast Capital explored a number of asset based loan options for the client. Including an asset based real estate loan secured against his personal residence. In the end, we were able to secure an equipment loan using only the excavators as the collateral. A master lease was arranged with the ability to amend the lease with new equipment lease schedules as needed going forward.

If your company is looking for an asset based equipment loan, give us a call 714-719-8966.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.