Tag Archive: asset based lending

Is Asset Based Lending Is A Good Fit For Your Company?

Is Asset Based Lending Is A Good Fit For Your Company?

At a time when many profitable companies are stumbling, posting net losses or weak cash flow, CFOs are increasingly finding it difficult to obtain debt financing. But even as one door–cashflow financing from banks–closes, another one-asset based lending–remains open, offering opportunities to mine a balance sheet for cash.

An Alternative Form of Debt Financing

When CFOs consider the growth plans for a company, they know that the well planned assumption of debt may be a key component of an effective strategy. Due to current economic conditions, many businesses–particularly those with high potential but less-than-stellar income statements–find the door to growth through debt acquisition remains firmly closed. It is barred by such lending requirements as financial ratios and other hurdles associated with traditional, cash flow-based financing techniques.

There are alternatives, however, according to Howard Kaufold, an adjunct professor of finance at Wharton, and Willie Brasser, managing director of the Corporate Lending Group at GE Capital. One particular option, assetbased lending, may be attractive to a wide spectrum of companies, from businesses looking to enhance their working capital to companies that are operating under Chapter 11 protection. Assetbased financing can smooth out cash gaps during business cycles, fund asset purchases and other acquisition strategies and, in general, give an enterprise the flexibility it needs to grow.

According to the Commercial Finance Association, assetbased lending is a $200 billion-plus market. Manufacturers represent about 31% Of the total marketplace, followed by wholesalers (28%) and retailers (17%).

As its name implies, assetbased lending involves financing that is secured with an item of determinable value, typically equipment or inventory. Because the nature of the collateral–which is readily identified and can be easily recovered–offers some level of comfort to lenders, qualified borrowers may be able to obtain competitive terms.

Brasser says a balance-sheet oriented approach can uncover value that may not be reflected on a P&L statement. “We don’t court risk,” he says. “But on the other hand we don’t have tunnel vision when it comes to valuation.”

An Opportunity for Some Borrowers, but Not for All

The very characteristics that may let certain businesses qualify for assetbased lending also serve to exclude others, cautions Kaufold. “Banks and other financial institutions often have a formula that specifies the percentage of inventory or equipment against which they would be willing to lend,” he says. “That is not very good news for service organizations, which may not have much in the way of tangible assets. Consequently, a significant number of companies may be effectively shut out of this alternative financing approach.”

Even when a deal is structured, assetbased lending can present some thorny issues. “For a lender, valuation can be an issue, particularly for assets that are used in highly specialized industries or market segments,” says Kaufold. “Contrast this with receivables-based financing, where the valuation is based on the receivable itself (which has an explicitly stated value) and on the ability of the customer to pay it off (which can often be determined using credit rating agencies).”

In addition to valuation, smart lenders consider a myriad of other issues. “An assetbased lender who is doing the job properly will consider a wide range of metrics, expanding the spectrum of borrowers that can qualify,” according to Brasser. “We do more than just valuing assets,” he explains. Assetbased lenders often tend to take an integrative approach, examining the entire manufacturing process, noting the time-to-collection of receivables, conducting sales trend analyses and considering such issues as the market for the borrower’s raw materials, he adds.

Compared to a cash-based financing organization, an assetbased lender assigns less weight to going concern, competition, market share and business strategy–although these issues are considered–and spends more time reviewing profit margins and determining whether the business can cover its interest expense and other debt service.


What is Asset-based Lending?

asset based lendingAsset Based Lending is the Solution!

Need additional working capital to grow your business? Borrow it!

Asset-based lending is essentially a line of credit using your accounts receivable as collateral to provide additional working capital for your business. In an Asset Based Lending relationship, Apple Capital Group advances funds to your account against an asset based loan line of credit based on a percentage of your eligible outstanding receivables. We have a lock-box in which payments from your customers are received and credited against the outstanding balance of your asset based line of credit. Unlike factoring, Asset Based Lending offers you the flexibility to manage the timing of your cash advances so you can control your cost of money. Asset-based lending is generally used by businesses in start-up, growth mode, or by businesses experiencing a shortage of cash. It is also used by those businesses currently in a factoring relationship that desire more control of their finances.

Example Availability: Following is a simplified example of the available funds for an
Asset Based Lending line of credit where the company has $1 million of receivables outstanding and has a loan of $400,000 against their receivables:

Outstanding accounts receivable balance              $1,000,000
Less **A/R > 90 days past due (ineligibles)                 (75,000)
Total eligible A/R                                                        925,000
Available to borrow (80% of eligible)                           $740,000
Less the outstanding *LOC balance                           (400,000)
Available to borrow                                                   $340,000

Asset based lending is the solution! Call us today at Apple Capital Group, Inc. at 866-611-7457 to discuss asset based lending solution that is right for you!

*LOC – line of credit
**A/R Account Receivable


Check out some great articles from the WSJ & Fortune on Asset Based Lending!


The rebirth of asset-based lending – published on June 1, 2011: http://finance.fortune.cnn.com/2011/06/01/the-rebirth-of-asset-based-lending/

Asset-Based Lending Grows in Popularity ‘Last-Resort’ Finance Option Gains Ground as Traditional Sources of Capital Dry Up; Cashing in on ‘Crimson Tide’ – published on February 2, 2010http://online.wsj.com/article/SB10001424052748704878904575031640396411182.html


Take Advantage of The Section 179 Deduction & Bonus Depreciation Before Year End!

2011 Deduction Limit – $500,000 (up from $250k previously). Good on new and used equipment, including new software.

2011 Limit on equipment purchases – $2 Million Dollars (up from $800k previously).

“Bonus” Depreciation – 100% (taken after the $500k deduction limit is reached). Note, bonus depreciation is only for new equipment. This can also be taken by businesses that exceed $2 million in capital equipment purchases.

Integrity Financial Groups offers value by utilizing over 100 years of deal making experience to provide the financing their clients need on specific projects. IFG provides several different financing structures and options, both on credit and collateral based transactions. We are extremely aggressive in our pricing and are looking to develop long term relationships with our clients.

To specifically go over a transaction, please contact us at: 866-611-7457 or email us at

Micro-Businesses: Do You Know Who You Are?

If you’re a micro-business, you probably know who you are – at least on the surface.

Approximately 77.5 percent of micro-businesses have fewer than 10 employees. Around 22.5 percent have no employees. About half are home based, and the other half work out of an office or other facility. These businesses are responsible for more than 65 percent of the gross domestic product.

But, do you have a deeper understanding of what drives people to start, and maintain, a micro-business?

There are many reasons why people start their own micro-business. Some may want more flexibility to pursue other passions, such as raising children or having more time away from the office. Others may have a vision for a new business idea, or identified an untapped market, that could only be brought to life if it was focused on 24/7.

Next, let’s look at what you may be unwilling to do while running your business. Do you derive so much pleasure from the business you started – which could include a home catering business to a five-star restaurant, or a home-based computer repair service to a software startup – that you do not have time for activities that might save you money? For example, research has indicated that many small business owners find the time it takes to fill out forms associated with government tax breaks so onerous that they don’t even bother. The same reticence applies in many cases to spending a couple of hours every week networking in order to meet people that could help expand your business or secure federal or state government contracts.
Furthermore, let’s examine how you spend your day. A day in the life of a “typical” micro-business owner varies tremendously, depending on your industry. However, research provides some insights into what you may have in common. For example, micro-business owners spend significantly more time on the Internet in comparison to other professionals, according to a study from Jupiter Research. This is not to say that you’re spending hours playing online video games or chatting with friends or family members. Most micro-business owners are using the Internet to respond to content and engage in community sites targeted to members within their industry.

Now let’s take a peek into the ideal office of a micro-business owner. Studies have shown that acting as if you’re leaving the house for the office, and setting up a professional work environment, can help home-based business owners be more productive. Suggestions to achieve this include getting dressed in clothing that is business casual; making sure family members understand that, even though you are working from home, you will not be available for non-work activities between the hours of 8 a.m. and 6 p.m.; and investing in furniture and computer equipment that is professional and comfortable.

Lastly, now that you have an idea of who you are as a micro-business owner, let’s take a brief look at who you are not. Research shows that the majority of micro-business owners are not interested in growing their businesses beyond a certain size. A majority of micro-business owners started their own companies because they love the hands-on work they do and growing past a certain size would require delegating that work. Also, many are more interested in the work/life balance that owning a micro-business allows. Therefore, growing into a multi-million dollar colossus is probably not on your list of professional goals.

Does this sound like you? What other traits and/or behaviors characterize micro-business owners?

Cracking the Government Contract Code, Part II: Eight Insider Tips from Small Business Experts

Cracking the Government Contract Code, Part II: Eight Insider Tips from Small Business Experts

by Reed Richardson.

In Part I of this series we explored some of the compelling reasons small businesses might want to branch out into government contracting and some of the marketing and operational nuances involved if they do. Here in Part II of our series, we distill some of those larger themes into concise, actionable advice from experts in the field.

Tip #1: First, get your red tape in order. Here are five quick and easy administrative steps a business owner should complete before embarking on any quest for government contracts.

Get a nine-digit DUNS number for your business.
Know your business’s NAICS codes.
Complete the federal government’s free Central Contractor Registration (CCR) and certify your small business as specially designated (e.g. veteran-, woman-, or minority-owned), if applicable.
Obtain an active Marketing Partner ID Number (MPIN) from the CCR.
Use your MPIN to register and certify your business using the Online Representations and Certifications Application (ORCA).

Tip #2: Conduct market reconnaissance. To find out which agencies have recently bought what your business is selling, look through the statements of work on current federal contracts, which can be found on the FedBizOpps website, explains SCORE mentor Jean Jolkovski. “Then go find similar projects in those same agencies nearby.”

Tip #3: Get listed (wisely). The federal government has dozens of industry-specific catalogs that its employees and project managers use to find pre-approved vendors from which they can buy. Getting your small business listed in these catalogs, which are called GSA Schedules, isn’t so easy, however, and if not done right it can turn into a big headache. “I always tell small businesses to hire someone to negotiate the process for getting listed with the GSA,” explains small business contracting expert Marc Amtower. “Otherwise you can end up with too low a price or, like a lot of companies, eating the shipping cost.”

Tip #4: Understand your competition. The government makes it fairly easy to see what other vendors are out there selling in your market space, notes small business contracting expert Marc Amtower in his book Selling to the Government. The primary method of doing this involves running a report called the GSA Schedule Sales Query (SSQ). Amtower estimates that the top five percent of vendors on each GSA Schedule reap somewhere between half and two-thirds of all contracts, while the bottom two-thirds usually share a measly 10 percent. “This provides you with a baseline on the food chain for your niche.”

Tip #5: Get free inside information and contract assistance. There are two key resources a small business owner should connect with to begin their search for government contract business—Procurement Technical Assistance Centers (PTAC) and Offices of Small and Disadvantaged Business Utilization (OSDBU). While PTACs are government-funded, third-party partnerships established to help connect buyers and sellers, OSDBUs are funded and staffed from within each government agency. “The people staffing an OSDBU don’t have any contracts and they don’t have any money,” notes Jolkovski, “but what they do have is lots of information.”

For example, the OSDBU at the federal Department of Transportation (DOT) offers a handy online contact list of procurement assistance specialists, broken down by individual DOT agency. Other OSDBUs, like the one at the federal Department of Labor (DOL), run quarterly Vendor Outreach Sessions, where entrepreneurs can market their capabilities directly to DOL managers in face-to-face meetings. Local PTACs also offer matchmaking events and procurement training seminars to help small businesses.

Tip #6: Tell the government what you can do. To successfully market your small business to government buyers, it’s imperative to create a concise, one-page summary of your company’s qualifications. Known in the contracting world as a Capability Statement (CAPE), this document should include a brief description of a company’s products or services, past industry performance, and staff or leadership. “This CAPE should also be in a pdf or jpg format,” notes Micromentor.org counselor Kenneth Larson, “so it can be quickly attached to an email and then easily opened.” (For more on how to write an effective CAPE and to see some successful, real-life examples, check out Larson’s smalltofeds.com blog on the topic.)

Tip #7: Make it easier for the government to do business with you. Marketing expert Amtower recommends that every small business make its online presence more government contract-friendly by dedicating a separate web page to government purchasing and by accepting payments from the GSA SmartPay credit card. “And don’t forget to include the GSA SmartPay logo on your website, alongside those of other accepted credit cards like MasterCard and Visa,” he adds.

Tip #8: Get clearance to double the size of your potential market. Because more than half of all government contract money is spent on classified projects, Jonkolvski points out that obtaining a security clearance can open up an even wider range of potential new business. To learn more about the process, check out the Defense Security Service’s Facility Clearance Checklist. There, you’ll find an important first step involves being sponsored by either a government agency or another cleared company.

Apple Capital Group, Inc.

Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the WorldCracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

This is Part I of a two-part this series about how small businesses can enter into the government contracting market. In Part II of our series, we distill some of the larger themes explored below into concise, actionable advice from experts in the field.

For entrepreneurs looking to expand their customer base in a struggling economy, finding new customers becomes critical to survival. So, why not go after what is inarguably the biggest customer of all, one that is almost guaranteed to have a need for whatever product or service a company may be selling? After all, as government contract expert Kenneth Larson points out, “There isn’t much that Uncle Sam doesn’t buy.”

Of course, it’s not just what the federal government buys that should get a small business owner’s attention, but how much and from whom. “The major reason to go after government contracts is purely the size of the market. Federal, state, and local government spending accounts for more than 30 percent of GDP,” explains Marc Amtower, author of Selling to the Government. “So, why wouldn’t small businesses want a piece of that?” And thanks to federal guidelines, that small business piece—targeted to be 23 percent of the nearly $500 billion allocated each year—is substantial, totaling $97.9 billion in newly awarded contracts in fiscal year 2010. Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

“The U.S. government market represents the single largest market in the world,” Amtower explains in his book. “[Anyone] can play in it. But not everyone will, and of those who do, most will not succeed. Why?”

Patience is a virtue (and a necessity)

A common reason that small businesses fail to crack into the government contract market involves lack of patience and dedication. “A lot of them think that they can somehow expedite the process of getting that first government contract,” Amtower says. “But then, after they get six months in and still have nothing to show for it yet, they give up.”

For early stage entrepreneurs, six months may indeed seem like an excessively long time investment with no payoff, but most experts say that landing an initial government contract usually takes even longer. In fact, a recent survey of active small business contractors found that it took them, on average, nearly 20 months to land their first federal contract.Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

“It’s not for people who want a quick hit,” advises Amtower. But the payoff, once a business does get its foot in the door, can be lucrative. The same study also found that, of those small businesses listed as an approved government vendor, fully four out of five now have more than $1 million in annual revenue, with about half of that amount coming directly from federal contracts.

To build early momentum, shoot for small victories

For a small business’s first foray into the government market, jumping into a bidding war over a long-term prime contract is likely a bridge too far. So, after checking off the necessary administrative steps to sell to the government, a better first-time goal might involve getting approved for one of the General Services Administration (GSA) Schedules. Though somewhat confusing in name, the federal GSA Schedules don’t involve timelines or calendars, but instead function like vast catalogs of government-approved business vendors, broken down by products and services.

For example, federal employees in need of, say, a new office chair can pull up the appropriate GSA schedule and shop for different models by their features and prices just as he or she would at any commercial, office-supply store. To purchase, they simply charge it to their government-issued SmartPay credit card, sometimes known as a P-card. (Federal expenditures for less than $3,000 do not require bidding or prior approval—what is known as “paperless procurement.”) The main benefit of selling through the GSA Schedule is that most transactions are of the instantaneous, credit card variety. government contracts

“For a small business just starting, these micro-purchases can be a great place to get your feet wet,” Amtower explains. Though small, all these incremental purchases can add up to a staggering sum. According to the GSA, there were 98.9 million SmartPay credit card transactions in fiscal year 2010, which rang up to a total of $30.2 billion. “I’ve got a small business client right now that makes $3 million a year just from government credit card sales,” Amtower says, adding that this company’s average SmartPay transaction is only $1,500. This nickel-and-dime sales profile runs counter to many pre-conceived notions about securing multi-year, multi-million-dollar government contracts, he acknowledges, but sometimes pursuing the former instead of the latter makes more sense for entrepreneurs.

“You’ll never be a major player by doing it that way, but maybe you don’t want to be,” Amtower says. But he’s also quick to point out that getting one’s small business products or services listed on the GSA Schedule still doesn’t guarantee anything in the way of actual sales, you still have to market your business effectively. “It’s just another tool; think of it as a fishing license rather than the fish.” Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

Selling is selling

“Selling to the government is really no different than in the commercial world,” explains Phoenix, Arizona-based SCORE mentor Jean Jolkovski. “One, you need to establish what you’re selling and two, why they should buy it from you instead of someone else.”

This requires small businesses seeking to land a prime or even a subcontract to take an active role in marketing their products and services. To do that, Jolkovski says, entrepreneurs must thoroughly investigate which government agencies and large private contractors might make good potential customers and partners, respectively. But once these contacts have been identified, don’t assume your small business status is enough to land you the deal.  Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

“There are 600,000 small businesses registered with the federal government,” Jolkovski points out. “So, if you begin a sales conversation by saying ‘Use me, I’m a small business’ that’s a big red flag to most government contractors, because then they think that’s the only thing you have going for you.”  Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

Instead, he recommends using a more typical sales pitch, one that starts off with a focus on your business’s unique sales proposition. “You have to find somebody who wants what you’re selling, then get a face-to-face with the project people who will need what you’re selling.” Only after all that, Jolkovski says, do you want to bring up any certifications your small business might have.  Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

No guarantees

“You don’t jump into becoming a prime contractor right away,” explains Larson, who doles out his decades of government procurement expertise on his blog smalltofeds.com. “You usually sort of ease into the business with the intent that you’re going to learn and grow. Often, small businesses position themselves with larger organizations as a Team member or subcontractor.”

“Teaming,” as it’s commonly referred to in the government contract world, can be tricky, however, and small businesses, in particular, must constantly be on their guard. But even if a small company becomes a Team member on an ultimately successful bid, Larson says this doesn’t necessarily mean they’ll reap the expected rewards. “Prime contractors are notorious for walking all over their subcontractors,” he warns. “Sometimes they’ll promise the world but then keep 95 percent of the work for themselves, giving the sub the minimum amount of work to fulfill the terms of the contract.”

In addition, Larson points out another big caveat that small businesses must consider when dealing with federal contracts. “The federal government usually contracts on a five-year basis, but it budgets on an annual basis,” he explains. So, even if a small business finally inks that lucrative multi-year contract, Congress must still allocate the necessary money every fiscal year to fund it. “If it doesn’t, you could be stuck.” As a result, most experts caution entrepreneurs to avoid putting too many of their eggs in the government contract basket.

Still, government contracts can be an excellent source of cash flow, Larson notes, providing a small business with that steady stream of income necessary for it to achieve real, sustained growth. As an example, he points to one of his former mentored companies, the California-based IT firm VSolvIt. “When they started five years ago they had nothing, but last year they landed a five-year, $14.5-million contract with the USDA,” he says. With that kind of regular income, he adds, thriving, rather than merely surviving, now becomes the goal.

“It’s really an art form,” Larson reiterates, “but once you understand the nuances of how to market and sell to the government, it can definitely be worth it.” Cracking the Government Contract Code, Part I: Start Selling to the Biggest Market in the World

Apple Capital Group, Inc.

Four Decisions to Make Before Leasing Equipment

equipment leasingMany small business owners say that overhead costs are one of the leading concerns and equipment leasing, or even barriers, to starting or growing a business. Most of those costs are associated with office space and other equipment. Today, however, business owners have the option to lease on a monthly or annual basis virtually anything from computer software and printers to delivery vans and specialized production machinery. There are many advantages of equipment leasing – tax, operating, and cash flow just to name a few.

Equipment Leasing “Renting”, as opposed to purchasing outright, can deliver important benefits to small business owners. First, leasing creates greater financial flexibility by enabling you to get what you need for your business without having to pay for it up front. Rather than having to pay thousands of dollars all at once, you will have a manageable payment, which frees up cash and credit to invest in growth and other priorities. Moreover, since you do not have to wait to buy critical equipment until you can afford it, leasing the equipment can help you move quickly to take advantage of emerging business opportunities and help preserve your competitive edge.

Second, in a small business environment of continuous innovation, access to the latest technology can be integral to the long-term success of a company. Leasing enables business owners to update equipment as necessary, without having to worry about disposing of, and accounting for, depreciated older technology.

Is Equipment Leasing Right For You?

While there are definite advantages to equipment leasing, there are several considerations you should take into account when determining the right arrangement for your particular needs.

When to lease equipment – The decision to buy or lease is specific to each piece of equipment and owner. Generally, factors worth examining when evaluating whether to lease or buy include cost, availability of capital/credit, nature of equipment and how long equipment will be needed. For example, in some instances it might make sense to invest in certain equipment (e.g., heavy machinery that will likely not change much) versus computer hardware, which requires frequent enhancements and updating.

Equipment Leasing or Renting of leased equipment – In a true or operating lease, your rental payments do not entitle you to any rights or ownership interest in the equipment. You only have the right to use the equipment until your term in the true lease contract is over. The upsides of a true lease are lower monthly payments and the potential to have the lease qualify as a tax deductible operational expense.

On the other hand, a financial lease or capital lease is used to finance the purchase of the equipment, allowing you to spread out payments over the equipment’s life cycle rather than paying in one lump sum. At the end of the agreement, you will own the equipment.

Terms of equipment lease – Equipment leases can be structured to include various conditions regarding installation, essential maintenance and training as well as options for when the lease expires (e.g., extend, purchase at either fair market value or fixed amount) or simply return what you have leased.

Selecting the right leasing partner – Credit history requirements and other criteria (e.g., age of company, type of business, amount of lease) differ by leasing company and can impact terms and pricing. You should compare lease packages from several different companies to ensure that you are getting the best deal possible. Once you select a provider, be prepared to negotiate.

The factors outlined above are essential to consider, and understand, prior to leasing any equipment. Make sure that the lease best serves your business needs. Do you have any suggestions for leasing equipment? Also consult with you CPA or experience bookkeeper in the tax advantages of equipment leasing.

Thinking of an equipment leasing or equipment financing, check out Apple Capital Group, Inc. Apple Capital group is an equipment finance lender based in Jacksonville, Fl. Give us a call! This article is a courtesy of Apple Capital Group, Inc., if you like the articles, please share it to friends and PLEASE click the google+1 so we can measure how it is helping this small business community! Thank you!

Start up Financing with Apple Capital Group

Apple Capital Group, Inc., is pleased to offer start-up options for companies and entrepreneurs. You have the ideas and the plan, let Apple Capital Group, Inc., provide you with the means to put those plans into motion with options and terms that won’t hurt your bottom line, and allow you to remain lean and nimble. Equipment financing is available to you through easy terms and professional service, and our Asset based lending programs let you avoid large deposits and investing in equipment that could take years to turn a profit.

Apple Capital Group, Inc., can provide you with equipment leasing, software leasing, as well as the start up funds you need. Apple Capital Group, Inc.,is prepared to put the support behind your dreams and ideas. Call us tody to discuss your options with our asset based lending programs at 866-611-7457.