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Asset Based Loans

An asset based loan is a revolving line of credit that enables a business to borrow against a defined base of collateral appropriately called a Borrowing Base. Included in the Borrowing Base are typically accounts receivable, inventory, and any other collateral acceptable to the lender. Under this arrangement, the borrower can request a draw of cash up to a certain percentage (the "Advance Rate") of the value of the collateral. For example, if XYZ Manufacturing has $100,000 in eligible accounts receivable, and a line of credit with an Advance Rate of 80%, XYZ can borrow $80,000. As new receivables are generated, the borrower can draw additional cash using the same formula. When the receivables are collected, the proceeds go to the lender to pay down the loan, and any additional monies can be redrawn by the borrower. This cycle of advances and collections continues until the loan matures.

Some traditional banks claim to offer asset based loans, though will not extend them to companies without pristine credit, thus making them credit based loans or "financial statement loans." As well, banks often set seemingly arbitrary fixed credit limits on their loan facilities with little regard for how much collateral you may have. Endeavor Business Credit only works with lenders who operate under the principles of true asset based lending-those who can provide maximum liquidity to your business.

Factoring

Having enough cash on hand to satisfy payroll and other working capital requirements can feel like a juggling act when all your cash is tied up in accounts receivable. Through the use of factoring, your business no longer has to wait for accounts receivable to be paid-you can sell your receivables for cash on day one and even let someone else worry about collecting.

Here's how it works:

  1. Generate invoice for services rendered or goods delivered.
  2. Submit invoice to factor, receive up to 90% of invoice amount (percentage depends on creditworthiness of your customers).
  3. Customer payment goes to factor who recovers the amount advanced plus applicable fees.
  4. Factor returns any excess funds collected.

Factoring has several distinct advantages:

  • Dramatically improved cash flow-get funded the day you submit your invoices.
  • Factoring can often get your business more cash up front than a bank loan.
  • Factoring is not a loan, and therefore does not appear as debt on your balance sheet, which could be perceived negatively. The transaction is simply the conversion of accounts receivable to cash.
  • Some factoring arrangements include credit protection. This means that if one if your customers goes out of business, you may not be obligated to the factor for the balance.
  • A factor can give you valuable insight into the credit standing of your customers on a regular basis-they can help you spot a troubled customer before it is too late.


Purchase Order Financing

If your business needs to fulfill large purchase orders but lacks the capital to manufacture the goods, purchase order ("PO") financing may be for you. PO financing comes into play well before an invoice is generated. At the time a large order is placed, you can take an advance against your purchase order toward the cost of manufacturing the goods. This tool is invaluable to many companies because it enables them to do substantially more business and assures their clients they possess the necessary capital to fulfill their orders.

Term Notes

In addition to a factoring facility or asset based loan, Endeavor Business Credit can sometimes arrange an additional tranche of cash funded at closing and payable in monthly installments. This additional advance can be secured by other assets you or your business may have. Our ability to get a term note funded depends on your specific situation. Please call Endeavor Business Credit today for more information.

DIP Financing

Operating in Chapter 11 bankruptcy is a big challenge for any business. The last thing you want is for all the time and money you've invested in your business to be devoured overnight by your creditors. Endeavor Business Credit can arrange Debtor-In-Possession ("DIP") financing, a loan or factoring facility that, when approved by the bankruptcy court, has priority over existing pre-petition (pre-bankruptcy) debt, equity and other claims. This can protect your company while supplying it with much needed capital.

Letters of Credit

A letter of credit ("L/C") is a great way for your business to obtain strengthened purchasing power with your vendors while giving your customers comfort that you can fulfill their orders. Conventionally used in international trade finance, an L/C is a document from a financial institution that would guarantee to your foreign vendors your ability to pay. Call Endeavor Business Credit today to learn more about L/C's and if they are right for your business.

A/R Outsourcing

Does the thought of billing and collecting accounts receivable keep you up at night? You are not alone. We are ready to assume the responsibility of billing and collecting from your customers so you and your staff can focus on doing business.