Tag Archive Alternative Lender

Cashflow and the Family Business

Larry Gonzalez 2 comments

Most businesses have issues with cashflow as it never seems be that expenses need to be paid before you actually get paid.  Unless you are a well established business and your income is predictable for years, banks can be a very fickle place to get help with this issue.

Personally, I like to deal with non-bank lenders as I find them much better to work with.  In my family’s experience, asking a bank for a loan has always been an awkward experience so we tend to stay away from it.  What I mean by awkward is that they want to know everything about you and the business history for many years.  When I need Small Business Funding, I need it when I apply for it, not in 3 months from now and I do not want the bank to take a lien on every piece of machinery and acre of land we have when I only need funding to cover some Operating Expenses.

Create Cashflow with a Farm Market Stand

 

If I were looking to borrow money to buy more land, I would be willing to use that land as collateral, but if I only need a Short-term Business Loan, why would I be expected to tie up everything I own as collateral.  To me, that is just tying my hands so I cannot work forward.

Alternative Cashflow Lenders will generally take the items involved in the transaction as collateral, and that is it.

What I mean by that is if you are looking for Cashflow Financing to cover short term Operational Expenses, Accounts Receivable Factoring or Accounts Receivable Financing as it is also called, the lender will take the Accounts Receivables as collateral.  Generally speaking, they will not want to take a lien on everything you own – commercially and personally – like the banks will nearly always do.

Now I will say, that as far as interest is concerned, the alternative lenders do charge a bit more than a bank would but to me, the cost far outweighs the benefits of keeping your other assets available for leveraging if the need arises.  To me, if I had everything tied up with the bank and then I needed to get additional funding for something and because of that I would need to go back to the bank, hat in hand, asking to have permission to do something with my own property – that is awkward to say the least!

Now I am not going to tell you which alternative lender to go to because everyone has their preferences but I will say that for me, I tend to return to the same lender each time the need arises as I can work with them seamlessly from where I am, I do not need to travel to the city for countless meetings which takes me away from what I should be doing.  I like to do as much as I can over the internet and the Commercial Lenders on the internet allow me to get the funding I need with the least amount of inconvenience.

As always, if you have any comments or questions, feel free to message me.

 

 

Heavy Equipment Financing

Sam Johnson No Comments

Have you ever tried to get Equipment Financing for your Heavy Equipment at a bank? If you have, you will relate to this article.

Last year I had to purchase a new combine for my farm and I just happened to be in my bank doing a deposit and I mentioned that I was on my way to the John Deere dealer to shop for a new combine. The teller I was dealing with, who was doing her job, suggested I speak with one of their representatives so the financing could be set up for the purchase. Since I had a bit of time on my hands, I decided to see what they had to say.

JD Combine

Let me say at this point, I have grown accustomed to dealing with a particular Alternative Lender for my Equipment Financing but I thought why not see what they can offer me.

To make a long story short, I met with the banker and he told me all about how the bank can offer. Once the niceties had concluded the bank proceeded to advise me of all the information they would need to have me supply they with which were the tax returns for the last 3 years, audited financial statements for the last 5 years, they wanted my wife to come in to fill out an application as well because they would need a joint personal guarantee from both of us and once they had that, they would be able to review the application to see if we could get approved. The review process was expected to take about 4 weeks once all information would be provided to them.

At that moment, I thanked the banker for his time and excused myself from his office.

Generally speaking, when you are dealing with an Alternative Commercial Lender, they will want the application completed, bank statements for the last couple of years and sometimes confirmation that our taxes are paid to the current date.

Processing time with the Equipment Finance Company I use is normally within 48 hours of submitting the application, we always have a response.

Despite from the fact that the Alternative Commercial Funder is so much quicker, the fact that they only have a lien on the equipment I purchase, not everything our family owns is a lot more comforting than the bank who wants to have everything we have as collateral as well as personal guarantees from both my wife and I.

If you have had similar experiences or any comments, it would be great to hear from you!

AB Don PicMy name is Don Goldberg and I am a farmer in Ohio, USA and my family has been involved with farming before our family made the move to the United States four generations ago. [more]
Ohio Farm Bureau