Best Factoring Companies And How They Assist Business Of All Sizes

Best Factoring Companies And How They Assist Business Of All Sizes

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

Factoring companies providing invoice financing are a reliable source of capital for companies of all sizes. Entrepreneurs seeking funding through traditional bank lending and through venture/angel investors face numerous obstacles in obtaining an approval, and most are rejected. Established companies seeking additional capital for growth are often declined due to the bank’s fear of over-leveraging a company.

Once thought of as the “lenders of last resort”, factoring companies are the mainstream source of capital for importers, distributors, manufacturers and service companies. Essentially, if your business is carrying accounts receivable on the balance sheet, factoring can unlock your cash flow and catapult your growth. Why wait 30, 60 or 90 days for your customers to pay? You get paid on day 1 when you use a factoring company.

Times have changed in the business world. Business owners need a flexible funding option that changes with those times.

If you would like to know more about how factoring can assist your business, please contact us.

To your success!

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

Working Capital. Every Business Needs It!

Working Capital. Every Business Needs It!

How long would your business last without enough money to cover expenses? Most businesses fail within the first three years due to lack of enough working capital, and even well established operations can experience cash crunches. Competitors are a constant. How financially strong your business is, will determine how well you can compete.

The frustration for many business owners is this – traditional lending sources either require you to be financially solid before they lend you money to grow or are conservative in the amount of credit they extend to the seasoned business operator.

So where do most business owners obtain the financing they need to grow their business? In short, asset based lenders. There is a 2nd tier of lenders below bank financing that finance purchase orders, equipment needs, inventory, real estate and accounts receivable. Essentially any asset listed on a given company’s balance sheet can be eligible for financing. Their focus is either on the quality of the asset they are financing or the financial strength of the customer placing the order (in the case of purchase order and accounts receivable financing). This approach makes financing growth much more obtainable for business owners.

What about financing for the established companies? A challenge remains here as well. Financing available for the established business owners is often inadequate to meet growth needs. Banks are most typically conservative and provide small lines of credit, even to companies with strong net worth and income. Companies need creative solutions when seeking additional capital and this creativity comes from the non-regulated, more entreprenuerial thinking, capital sources in the market. Could your business benefit from knowing a partner like this?

About Huntington Coast Capital.

Huntington Coast Capital secures funding for companies in a broad base of industries. Our clients come to us to find a more flexible lending partner to meet their growth needs. Many are declined by the bank and are in need of a more creative and entrepreneurial funding solution.

We consult on a wide range of funding options for business owners throughout the United States in the following areas:

  • Supply chain financing
  • Equipment loans and lease programs (learn more about our equipment loan platform offered through our subsidiary)
  • Lines of credit for working capital needs
  • Term loans for marketing, hiring staff and general expansion needs
  • Factoring services for accounts receivable financing that also provides for back office credit and collection functions
  • Purchase order financing
  • Asset based loans
  • Business acquisition financing
  • Inventory financing
  • Private commercial real estate bridge loans
  • SBA loans for business and real estate needs

Whether you are a startup or established, in need of $100,000 or $10,000,000 we have the capital partners to meet your needs. Contact us to see how we can assist in taking your business to the next level. To your success!

Asset Based Loans  The Difference Between Interest Rate and Opportunity Cost

Asset Based Loans The Difference Between Interest Rate and Opportunity Cost

Huntington Beach CA 

What is the interest rate? How much does it cost? What fees are involved? These are some popular questions our clients ask when considering borrowing money to grow their business. These questions are typical when looking to see how much something is going to cost over the long run. However, these questions are more applicable to purchases related to a home mortgage, a car loan, applying for a credit card or other more commodity based financial products.

When considering Opportunity Cost the analysis is much different. For example, if I told you the cost of capital for fulfilling multiple $100,000 orders is 20%, you may say “that’s too expensive!” However, when you take a closer look at it, the true funding costs may be only 6% to 7% per order less early payment discounts. The borrower makes substantially more money than the cost of financing if the margins can support the cost.

Here is an example of a typical analysis we take our clients through. It’s a simple way to determine if financing is right for your business.

  • A purchase order is received from a customer and the cost of goods is $100,000 (your cost or wholesale cost)
  • Your gross margin on this sale is 60% (your sales price to the customer is $160,000)
  • Your financing cost is 6.5% of your wholesale cost for 120 day funding or $6,500 ($100,000 multiplied by 6.5%)
  • The gross profit calculated after financing cost is $53,500 on this order ($60,000 profit minus $6,500 in finance cost)

The question becomes, “would you spend $6,500 to earn $53,500?” Most all of us would agree that is a worthwhile opportunity. There are some variables that can effect these numbers both positively and negatively. For example, if your company has high fixed costs, this will chew in to the profits. On the contrary, if you are able to negotiate a discount for early payment to suppliers (i.e. a 2% discount for payment in 10 days, expressed as 2%/10 net 30) it will have a positive effect on profits.

Keep in mind that this is one sale and each additional sale will have a better net earnings ratio. This is because fixed costs typically stay the same and more profit gets kicked to the bottom line as more sales are realized. An example of where this analysis doesn’t make sense is if a company has out of control fixed expenses or super slim margins as seen in the electromics industry. In our experience, this analysis pencils out for most of our clients.

We always encourage our clients to look at how much they stand to make versus solely focusing on cost. The lender also needs to earn a return and if expectations are managed, business owners can grow their companies and earn more as a result.

About Huntington Coast Capital. 

Huntington Coast Capital secures funding for companies in a broad base of industries. Our clients come to us to find a more flexible lending partner to meet their growth needs. Many are declined by the bank and are in need of a more creative and entrepreneurial funding solution.

We consult on a wide range of funding options for business owners throughout the United States in the following areas:

  • Supply chain financing 
  • Equipment loans and lease programs (learn more about our equipment loan platform offered through our subsidiary)
  • Lines of credit for working capital needs
  • Term loans for marketing, hiring staff and general expansion needs
  • Factoring services for accounts receivable financing that also provides for back office credit and collection functions
  • Purchase order financing
  • Asset based loans
  • Business acquisition financing
  • Inventory financing
  • Private commercial real estate bridge loans
  • SBA loans for business and real estate needs

Whether you are a startup or established, in need of $100,000 or $10,000,000 we have the capital partners to meet your needs. Contact us to see how we can assist in taking your business to the next level. To your success!

$500,000 2nd Position Commercial Real Estate Loan Secured For A Lodge In Big Bear, CA

$500,000 2nd Position Commercial Real Estate Loan Secured For A Lodge In Big Bear, CA

Huntington Beach, CA A client came to us looking to pull cash out on his lodge property in the Big Bear area of California. The funds were to be used for improvements to the property. The request was a challenging one due to the fact that the commercial real estate loan request was really more of a small business loan.

Commercial real estate loans for specialty use or single purpose properties require a deeper analysis. Unlike traditional commercial real estate loans against traditional properties like office, industrial, multifamily and retail properties, specialty use properties need to be analyzed beyond the loan to value and income of property. If a bowling alley closes down, for example, the is significant cost in changing in to something else of improving the location under new management. The lender has to not only be in the property at a conservation loan to value, but also has to buy in to the business being able to survive on a going forward basis.

“This place has been here for years! This is not a risky loan for the lender!”

This is something we hear quite often when being sold on securing funds for specialty or single purpose properties. Anyone remember Circuit City? They were forced to close their doors and are currently under a massive re-organization. Established in 1949, they enjoyed steady success through the 70’s, 80’s and 90’s before feeling the pain of consumer shift to online shopping and competitors entering the space. I have personally witnessed McDonald’s locations closing! The point is that anything can happen with business purpose commercial real estate, no matter how large or how small the operation is.

What additional analysis is required? 

Some of the points to consider with these property types are the following:

  • market demand for property
  • competition in the surrounding area
  • obsolescence of amenities or attraction (how many kids go to the arcade nowadays?)
  • quality of management
  • customer experience (in today’s world a bad Yelp review could have damaging impacts)
  • landscaping and overall desirability of the property

This is not a complete list, but covers some key points to be considered when financing these property types.

If you have a challenging loan request, we would like to hear from you!

To your success!

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

HCC Can Now Offer Commercial Real Estate Loans In California

HCC Can Now Offer Commercial Real Estate Loans In California

Huntington Beach, CA Huntington Coast Capital is now licensed to secure asset based, institutional commercial real estate loans in California. Prior to receiving the license, we were only able to place private money asset based loans for bridge or special purposes. Now that the broker license is in place, we can secure permanent funding for all asset types in commercial real estate.

We look forward to better serving our clients with our expanded asset based loan product offering. All types of commercial real estate will be considered. If you are looking for a commercial real estate loan, give us a call 714-719-8966.

Why You Do Not Need Good Credit For An Asset Based Loan

Why You Do Not Need Good Credit For An Asset Based Loan

Huntington Beach, CA

In the lending world, so much relies on personal credit as part of the analysis. Strong personal credit is something not everyone has, fewer than you think in fact. As business owners, when payments are delayed, you are forced to delay your payments to suppliers. However, because your business income is your primary source of income (in most cases), this means personal obligations can also be delayed. Timely payments on items such as your personal mortgage payments, electricity bill, car payments, and so forth all attribute toward your credit score. Delays in revenue and income from your business can quickly effect your personal life and negatively impact your credit score. A poor credit score makes it nearly impossible to be approved for additional credit.

Asset based loans come to the rescue in these cases! Asset based loans can be used for either real estate or business loan purposes. Let us explore below.

Asset Based Loans For Business.

The company balance sheet reflects all the assets of a business (remember assets, minus liabilities equals equity?). Assets that can be used as collateral for an asset based loan are accounts receivable, equipment, inventory, and real estate (more on asset based real estate loans below).

Accounts receivable are payment obligations from customers for goods purchased or services performed. An accounts receivable invoice reflects the amount due and when payment is expected (usually with 30, 60 or 90 days). These invoices are considered assets and can be used as collateral for a loan.

There are two types of asset based loans available against invoices and those are factoring loans and an asset based line of credit. A factoring loan is a buy sell agreement where the factor provides and advance against the face amount of the invoices to improve the cash flow of the business. Factoring loans are more than just an advance. In a factoring arrangement the factor manages the back office and credit and collection functions for the client. Outsourcing the back office functions is often more cost effective than hiring internal staff. For more information on factoring loans click here.

An asset based accounts receivable line of credit provides an advance against accounts on a total availability In this type of arrangement the lender looks at the accounts receivable aging and advances against the total balance outstanding. There is no back office management involved in an asset based line of credit and as such, the rates are a bit lower.

Asset based loans against inventory and equipment are just as you would expect. The lender advances against the value of the collateral. Proceeds are used to increase working capital and assist in growing the business. Equipment loans have been a major source of growth for us in the asset based loan category. For more information on this type of loan please visit our sister company Equipment Finance Quotes.

Asset Based Loans For Commercial Real Estate. 

Commercial real estate transactions also use asset based loans on a broad basis. If you have a traditional property type and have plenty of time to close using a bank is your best bet. High scrutiny in underwriting translates in to lower rates although the process can be tedious.

Asset based loans in commercial real estate are used as bridge loans to acquire property. Scenarios where time is of the essence or where a property requires creative underwriting, fit well with asset based commercial loan requests. Virtually all property types are considered and the process is much faster and much less document intensive than traditional bank loans. For more information on asset based loans for commercial real estate click here.

You noticed that I did not mention personal credit in any of the explanations above. This is because it does not come in to the analysis to any important degree. The only exception to this is if the borrower has a negative mark on his credit where a lender providing a similar loan took a loss on that loan. Poor credit due to inquiries, slow payment of personal obligations, charge off notices, default on credit cards and the like rarely come in to play. The main focus is the quality of the asset being used as collateral.

I hope you enjoyed reading this. If your business could use an asset based loan or if you need an asset based loan to acquire commercial real estate, give us a call at 714-719-8966.

To your success!

Patrick Zazueta | Managing Director
Huntington Coast Capital, Inc.

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.

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

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