Purchase Order Financing In California

Purchase Order Financing In California

Purchase Order Financing

Facilitating Business Growth Through Purchase Order and Supply Chain Financing

 

HCC Apply Online Button

The barrier to growth for most all businesses, especially startup ventures, is cash flow. Banks will tell you that you need two years of profitability (as shown on your company tax returns) before they will consider providing a business loan. If you do manage to qualify for a bank loan, it will almost always be an SBA term loan (one lump sum loan amount usually secured by real estate). These loans do not address the ongoing working capital requirements business owners need to fund purchase orders and other monthly cash flow needs.

This lack of access to capital is the reason the majority of businesses fail within the first three years.

The capital partners we represent have an entrepreneurial approach to lending that opens the door for many to grow their business without the covenants and restrictions of traditional financing! Here are a few examples of recently funded deals:

  • $100,000 Supply Chain Funding Line for a CBD Industry client – a distributor with enormous growth potential needed the capital to fund purchase orders. The initial line provided is $100,000 and will grow as the company’s sales grow. Estimated monthly volume with the financing in place is between $600,000 to $800,000 in monthly gross revenue.
  • $2,500,000 Supply Chain Line for a Home Furnishings Importer/Distributor – an already established company needed additional capital to increase sales. The use of this supply chain line of credit will allow them to grow from $50,000,000 to $75,000,000 in annual gross revenue!
  • $4,000,000 Supply Chain and Factoring Line for an Importer of PPE products – a newly formed entity in the personal protective equipment space needed capital to purchase goods from overseas suppliers. The partners in the business had solid experience and strong relationships on both the supplier and buyer side. The line of credit will allow them to scale their business and meet buyer demand.

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!

Patrick Zazueta
Huntington Coast Capital, Inc.
Direct: 714-719-8966
patrick@huntingtoncoastcapital.com
www.huntingtoncoastcapital.comBRE License #: 02090967

The Process: Purchase Order Financing for Personal Protective Equipment

The Process: Purchase Order Financing for Personal Protective Equipment

Purchase Order Financing for PPE Products

Could you benefit from purchase order financing for personal protective equipment? Do you have purchase orders from credit worthy customers for PPE Products? Is a lack of capital holding you back from expanding your PPE business?  Do you have inventory in transit or a factory allocation? Huntington Coast Capital can help. 

The global pandemic has driven the need for PPE Products of all kinds including but not limited to:

  • nitrile gloves
  • face masks
  • face shields
  • hand sanitizer
  • gowns
  • COVID testing products
  • and more…

Huntington Coast Capital secures funding for manufacturers and distributors of personal protective equipment products. Our capital partners provide inspection services to verify all supplier allocations through onsite inspections of factories and allocation holders. In addition to inspections, all documentation in a proposed transaction is analyzed for authenticity. These added services provide more than just a pocket book for purchase order financing. Complete credit management and collection of customer payments is also managed. This allows the client the freedom to facilitate orders with the confidence of knowing they are in partnership with a world class credit management, quality control and financing partner.

Purchase Order Financing for Personal Protective Equipment

The Process 

Once the purchase order financing for PPE products is in place the lender follows these steps:

  • lender inspects all documentation involved in a transaction for authenticity (i.e. PO’s from end buyers, SGS reports, factory details, etc.)
  • once approved, the lender will pay the deposit to begin production directly to the factory
  • the lender pays the balance upon completion and inspection of the finished products
  • products are delivered by air or boat
  • products clear customs
  • the buyer is invoiced
  • the buyer inspects and accepts the goods and manages their logistics to the desired location (unless drop shipped)
  • the buyer either pays onsite or is granted terms for future payment (terms granted to credit worthy customers only)
  • the buyer makes their payment to the lenders lock box
  • the payment covers the amount advanced to the factory or allocation holder, the fund’s principle and all finance charges and fees
  • the cycle repeats

Items needed for preliminary underwriting of a purchase order financing request: 

  • complete contact information for the buyer(s) if not listed on the purchase order
  • complete contact information for the factory(ies) and allocation holder(s)
  • business entity documents for the client’s entity (i.e. Articles of Incorporation, Organization, etc.)
  • resumes/bios on the owners in the entity
  • Huntington Coast application
  • account receivable and payable aging reports (if applicable)

These items will give the fund enough to begin with their preliminary review. If the initial review is satisfactory, further conversations are had to go over the details in more depth.

The Huntington Coast Capital Advantage:

Unlike other direct lenders in the space, we are unbiased in our solutions. Direct lenders involved in Purchase Order Financing for Personal Protective Equipment have one product to present and sell – their own. We are not beholden to any particular lender. This unique advantage has earned us a reputation for unbiased consultation and proven results. Put the power of our industry knowledge to work for you today!

About Huntington Coast Capital: 

Established in 2009, Huntington Coast Capital has a seasoned tenure in the purchase order financing space. We have been assisting clients in traditional industries for over 10 years. When the COVID outbreak began back in early 2020 our focus shifted to purchase order financing for PPE products as the overwhelming majority of inquiries surrounded the space. In the past 12 months we have facilitated numerous transactions by bridging our PPE clients with the appropriate funding partner for their business.

Purchase Order Financing for CBD Products

Purchase Order Financing for CBD Products

Purchase Order Financing for CBD Products

Huntington Coast Capital acted as the placement agent for a purchase order financing request for a client in the CBD industry. The purchase order financing facility will greatly assist the company in expanding its market. The new supply chain financing will allow the company to expand their sales from $20,000 per month to more than $500,000 per month!

The CBD market has been on the rise in recent years. According to Global News Wire – The global CBD oil and CBD consumer health market size is expected to reach USD 123.2 billion by 2027, expanding at a CAGR of 25.6% over the forecast period.

Growing buyer awareness regarding various health benefits offered by cannabidiol (CBD) and increasing legalization of cannabidiol oil and infused products is contributing towards the adoption of cannabidiol as a consumer health product, thereby positively impacting the market growth. Furthermore, changing buyer perception and attitude towards hemp-derived cannabidiol-based products is further bolstering revenue growth over the forecast period (full article).

Huntington Coast Capital’s partners in the space facilitate the growth of many CBD wholesalers and distributors. They do this by providing the much needed supply chain financing and factoring services necessary to facilitate orders and meet demand.

Our client currently has domestic partners formed with distribution in Texas and a lab in Colorado. All products are tested and approved according to industry guidelines. Operations to this date have been internally financed and limited due to available cash on hand. Companies starting out in any industry typically start with their own money. If the company is successful, they quickly run out of their own resources and need to find a capital partner to continue to expand. This is the best problem a company can have, but stressful none-the-less.

Supply chain financing and purchase order financing (there are slight differences) meet this need by paying suppliers directly. By financing the cost of goods, our clients are able focus on building customer relations and not worry about the capacity to fill orders.

If your CBD business could benefit from purchase order financing, we would like to hear from you. Call us direct at 714-719-8966.

Purchase Order Financing For Nitrile Gloves

Purchase Order Financing For Nitrile Gloves

PPE Update: Huntington Coast Capital is close to verifying new production allocations of nitrile gloves through several different suppliers. Once confirmed, these orders will be eligible for purchase order financing for nitrile gloves. The goods will be delivered to directly to the buyer’s location or a designated warehouse where they can be inspected prior to buyer payment.

Huntington Coast Capital is proud to serve the nationwide community of first responders, heathcare providers, governmental agencies and police and firefighters. If you have clients in need of purchase order financing for nitrile gloves, we would like to speak with you.

Our core business in traditional industries is still very much intact. We advise on a wide range of funding options 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!

Patrick Zazueta
Huntington Coast Capital, Inc.
Direct: 714-719-8966
patrick@huntingtoncoastcapital.com
www.huntingtoncoastcapital.comBRE License #: 02090967

Purchase Order Financing For PPE Products

Purchase Order Financing For PPE Products

Purchase Order Funding For PPE Products

Huntington Coast Capital is continuing its fight against the COVID-19 pandemic by continuing to secure purchase order financing for PPE products. Over the past few months we have facilitated millions of dollars in purchase order financing for our clients in the PPE space. According to UNICEF the demand for PPE products will continue for the foreseeable future and this means financing required to fill orders will continue to be in demand.

Many lenders in the PPE financing space have pulled back their purchase order financing due to problems experienced with some of the orders. Orders were being shipped late or incomplete and sometimes both, due to the huge demand. Huntington Coast Capital’s fund partner has an approved list of suppliers in China. They have worked with and established strong business relations. This partnership has greatly reduced supplier performance risk. By controlling each step in the supply chain to the best of their ability, they are mitigating the risks associated with supplier performance and quality.

Where do we go from here? Huntington Coast Capital will be partnering with another group to deliver PPE products directly within the next few weeks. The warehouse space will be located domestically and contain a broad range of PPE products for sale. This additional step will eliminate the supplier risk entirely and allow our clients a faster turn around for those urgent orders. We look forward to announcing the opening of this facility. The warehouse  space has been secured and the products are on their way!

If you are looking for purchase order financing for PPE products, we would like to speak with you.

Patrick Zazueta
Huntington Coast Capital, Inc.
714.719.8966

 

Purchase Order Financing For PPE

Purchase Order Financing For PPE

Huntington Coast Capital is proud to have been contributing in the fight against the COVID-19 crisis by providing purchase order financing for PPE products. Our asset based loan programs have secured purchase order financing for much needed supplies. These items include face masks, gowns, gloves, shoe covers and face shields.

Large purchase orders from counties, health organizations and hospitals from across the country have been filled thanks to the availability of capital in this unprecedented time. Without access to capital, supplies would halt and safety of our healthcare workers on the front lines would be compromised.

Purchase Order Financing For PPE

Are you an existing supplier of medical supplies in need of purchase order financing for PPE? Are you in need of additional capital to fill orders from your customers?

In this environment, we have seen huge demand because the order sizes are far too large for the average supplier. For instance, we have seen orders for a couple million dollars to over 100 million dollars. We have access to the capital required to fill these purchase orders.

Asset Based Loans – How To Figure The True Cost

Asset Based Loans – How To Figure The True Cost

Asset Based Loan

Understanding the cost of an asset based loan when contemplating the business loan options available in the marketplace is critical to making an informed decision. Most all business owners need capital from time to time to meet the needs of a growing business. They self-fund operations for as long as they can and if they hit their growth goals, they often require additional capital to get there.

The problem is that fast growing companies are often not profitable and have little in the way of retained earnings. This due to the fact that every dollar going in to the business is going back out to meet working capital needs. This is where asset based business loans are a dependable source of capital.

However, the analysis is much different. Your typical business loan is an SBA loan with a 10-year amortization and fixed monthly payments. This type of term loan is great for fixed costs and long term assets such as equipment, real estate, etc. But what if your needs are revolving in nature?

For example, our typical client comes to us because he has a big order that they can not fulfill on their own. Here’s a breakdown of a common scenario we secure funding for:

  • $1,000,000 loan request to cover the cost of goods and pay suppliers
  • The company has a 30% margin or can make $1,300,000 upon the sale to their customer (if they can get a hold of $1,000,000 to fulfill the order!)
  • They have a verifiable purchase order from their credit-worthy customer
  • They are expecting the total business cycle to be 60 days from the time of the order to shipment to the customer to being paid by the customer
  • Cost of the revolving credit (in this case purchase order financing, a form of asset based lending) is 2% of the loan amount per month
  • Simple equation: $1,000,000 x 4% equals $40,000 (cost of capital), $1,000,000 carrying a 30% margin equals $300,000 profit
  • Net profit on the transaction after the funding cost is $300,000 minus $40,000 or $260,000.

The question becomes, would you spend $40,000 to make $260,000? The answer for almost everyone is yes! As seen, figuring the cost of an asset based loan is much different than a typical business loan. The review consists mainly of looking at the return on capital versus “interest rate” which so many people are obsessed with.

We have actually had clients say that this cost of capital is “too expensive” on an annualized basis. If the business loan revolves every 60 days, the cost is $40,000 multiplied by 6 (60 days divided in to 360 days for the year) the cost is $240,000 in annualized capital cost. However, we need to remember the profit the company stands to make with this type of asset based loan. The net profit per turn was $260,000. If we multiply that by 6 we get $1,560,000 income on an annualized basis.

So, the question becomes, would you spend $240,000 to make $1,560,000? The answer is a resounding, YES, of course!

If your business could grow using a creative asset based business loan, we would like to hear from you and discuss the options.

To your success!

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

Purchase Order Financing For The Cannabis Industry

Purchase Order Financing For The Cannabis Industry

We have seen an increased number of requests for purchase order financing in the Cannabis industry. This typically includes the purchasing of seeds from suppliers. Our clients are either distributors or sell to distributors within the Cannabis industry.

While Cannabis is not Federally regulated, other products within the industry are. For example, the popular CBD supplements in the market today can be financed by a broad base of lenders within our network. CBD products are used for both human and animal treatments. My vet uses CBD when my dog goes in for a grooming. These CBD products are the preferred alternative when calming animals for procedures of all types. People take CBD for general relaxation and pain relief. The organic nature of the product is the main reason it is taking over in popularity from the synthetic options.

The other product in the industry, the Hemp seed, has been legal for many years and has been used to make clothes for decades. It’s durable and organic, making it the preferred choice for some.

It is our opinion that the demand of Hemp and CBD products will continue to increase for the foreseeable future. Huntington Coast Capital wants to be a part of this high growth industry. If your business is in the Cannabis Industry and in need of purchase order financing, we would like to speak with you. We are also able to finance real estate and equipment in the industry. Call us to discuss the options 714-719-8966.

Patrick Zazueta
Huntington Coast Capital, Inc.

3 Things Needed To Qualify For An Asset Based Loan.

3 Things Needed To Qualify For An Asset Based Loan.

Huntington Beach, CA – Asset based loans can be made against any asset on a company’s balance sheet. These include accounts receivable, inventory, equipment, real estate and even off balance sheet items like purchase orders. However, simply having the asset is not a guarantee that you will be approved for a loan.

In order to improve your chances of being approved for an asset based loan, you need to have at least two of the three of the following:

  • Credit
  • Cash Flow
  • Collateral

There are different forms of asset based loans and which two hurdles you will need to clear will change depending on the type of loan you are looking for. Let’s take a closer look. The first benchmark in many asset based loan reviews is credit. This refers to both your personal and business credit rating. In general, a credit score of 680 or better is required of your personal credit. Business credit is a little more subjective, but primarily entails your payment history, past judgments and IRS records. The asset based lender will want to know that you are running your company well by paying your suppliers on time, managing your legal recourse exposure and paying your taxes.

In an invoice factoring arrangement, personal credit is not of that much importance. The majority of the credit decision rests on the financial strength of the customers. Because the lender collects all customer payments through a controlled lock box, the lender has more control over the repayment of the loan. The collateral in this case is the invoice itself and the cash flow is also manged through the lock box. Two of the three requirements are met.

In an asset based business loan, personal and business credit along with cash flow are most important in companies with low levels of assets such as staffing companies, law firm and accounting offices. The collateral taken when lending to service companies is covered under a “blanket lien” of all company assets. However, there are not a lot of hard assets owned in a service company. The focus in this case shifts to the personal credit of the owners and how profitable the business is. The more profitable, the higher the cash flow and the more cash available to pay the company’s debts. This said, loaning to service companies sometimes requires that outside collateral be required, such as a lien on a personal residence or investment property, if available.

In summary, if you have the collateral for an asset based loan you need either the cash flow or credit to compliment the loan request to increase the chances of approval. While higher in cost than traditional financing, there are lower barriers to being approved and less financial scrutiny of your business.

If your company could benefit from an asset based loan, we would like to speak with you and bring the best options to the table.

To your success!

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

The Difference Between Bank Asset Based Loans And Private Asset Based Loans

The Difference Between Bank Asset Based Loans And Private Asset Based Loans

Huntington Beach, CA  Owning a business takes a lot of cash on hand. Cash to make payroll, pay rent (or a commercial mortgage), purchase supplies, marketing and advertising, etc. Business owners reach out first to the bank they have their business deposits with to see if they can provide them with a loan. Their bank is a good place to start, and if they can qualify, their journey ends there.

Different types of asset based loans.

Asset based loans can be made against any asset seen on a company’s balance sheet. The common assets used as a collateral for a loan are real estate loans, equipment loans, inventory and accounts receivable. Other collateral considered assets by a lender are purchase orders and supply chain funding lines.

Asset Based Loans Obtained From Banks. 

Banks provide asset based loans, but have stricter requirements than the private sector. The first difference you will notice is that a bank will most typically require you to open a deposit account with them in exchange for doing the loan. Depending on the size and type of asset based loan, the bank will require you to switch you entire banking relationship over them as a requirement for doing the loan. Switching your banking relationship is no easy or convenient task.

If deposits are not required, that means that the bank will look to fit you in to an SBA loan program. Banks mainly offer term loans under the SBA loan program versus revolving lines of credit. Loans made against accounts receivable, purchase orders or for supply chain funding are not on the menu for most banks.

The preferred type of asset based loan banks like to issue are for real estate and equipment purchases. The range of your required down payment will depend on the type of loan being considered, your business and personal credit and the amount of liquidity you have on hand post purchase. Most banks set their bottom limit at a 680 credit score or better to be considered for an asset based SBA loan.

Private Sector Asset Based Loans. 

In the private sector the whole credit picture is also considered, but not scrutinized quite as closely. The main consideration is the asset quality itself. For example, in an accounts receivable loan, the credit quality of customers, average collection days and historical bad debt write offs are of paramount importance. The private lender will look at business and personal credit scores and evaluate the company’s financial position, however they will also listen to the story. Many business owners have lower credit scores because all of their cash has gone in to their business and this sometimes creates issues meeting their obligations on time. The private asset based lender understands that an asset based loan will improve the company’s cash and allow them the growth opportunity they wouldn’t otherwise have without access to capital. This especially true when considering loans to finance purchase orders or establish a supply chain line of credit.

What Asset Based Loan Is Right For Your Business? 

Our advice is to always check with your business bank first. They are the ones that have the experience with your business and it’s always prudent to confirm their ability to assist.

The facts are that most business owners do not qualify for bank loans. This is the reason there is a market for the private asset based lender. Private capital can be used as a bridge or as a permanent financing for those that prefer less oversight from their lending partner.

What Value Does Huntington Coast Capital Bring?

In a word, experience. We have decades of experience in the private capital and institutional capital markets. We navigate our clients through the options, saving them time and when finding the right asset based lending partner for their business. If your business could use some additional capital to purchase equipment, real estate or to finance growth opportunities, we would like to speak with you.

Call us to learn more 714-719-8966.