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Asset Based FINANCING

is a type of business financing that is secured via the borrowing companies assets.

ABL vs Traditional Financing can tend to better serve a small to mid sized business in two ways typically. On one hand it can allow a business to get creative in terms of securing financing by allowing a business to use existing inventory or a piece of equipment as collateral. This works well especially for businesses where there isn’t sufficient business revenue to qualify for traditional bank financing. On the other hand businesses find that using an ongoing receivable as collateral for financing can offer more in the range for growth versus a traditional bank loan, which is based solely off of past revenue and therefore will not take into account future growth.
Typically ABL deals are funded to the business in the form of a revolving line of credit. Startups and growing businesses have constant needs for capital. Hence why ABL is typically funded as a line of credit since that structure allows a company to borrow from assets on an ongoing basis as needed.

We pride ourselves on being a Full Service Financial Firm

When it comes down to the world of Asset Based Financing and Lending (“ABL”) we know these can be very tough waters to navigate. Whether our clients are looking to turn their inventory into capital, or perhaps they are seeking to finance a purchase order, or maybe even finance the next piece of equipment. We can help our clients reach all of their goals.

Our goal at Troy Business Group is to be there for you regardless of your needs. If the financial product exists in the world of ABL, then count on Troy Business Group. We will not only provide your needs, we at Troy will do so all while providing the best performance and service to meet your needs. Here are just a few of our ABL products:

PURCHASE ORDER FINANCING

Purchase Order financing offers a variety of options to a wide selection of industries, small businesses, and vendors who supply and make products. Congratulations! Your product sold, you have your first order, but you lack the capital to get the goods to your new customer.

Now with Troy Business Group and our Purchase Order Financing team, our clients and prospects have the financing to be able to have the working capital needed to turn that order into a delivered product. Create two happy Customers – Our PO client and their happy client! All thanks to PO financing being able to finance that order.

account receivable fincancing

account receivable fincancing

account receivable financing

Sometimes known also as Invoice Financing, it is a great solution for businesses that need working capital. Is a Net 30, a Net 45 or a Net 60 payment from your customers strangling your cash flow? You are not alone! Lots of SMB’s and even major businesses as well need additional cash flow at some time whether its for payroll,inventory needs, or simply wanting to grow the business with new projects.

Accounts Receivable financing can increase or decrease based on your current business needs and allows you to now have a partner that will help make sure your clients pay on time, without having to take on another staff member or yourself to do so.

Factoring

Factoring is a type of Asset Based Financing product in which a business sells its accounts receivable, in exchange for up front advance against the value of that receivable. This is different from Accounts Receivables Financing due to the fact A/R Financing will only advance on a receivable the receivable is not purchased. Meaning A/R Financing leaves the collection of the debt to the business as the business still owns the receivable. In Factoring, a business sells its receivable to the financing company in exchange for a higher advanced percentage on the receivable. Therefore the Factoring company assumes the role of collector and must now collect upon said receivable. Selling the receivable via Factoring can afford a business a higher upfront funding against the value of the receivable. For example A/R Financing can typically advance up to 80% of the amount of receivable, yet a business can be advanced up to 95% of a receivable by selling it on the Factoring side.

The con to this pro of a higher advance amount is that the financing firm now owns that receivable and now will expose that to the businesses client once the financing company calls to collect upon the debt now. In that instance, some businesses may find that level of interaction with their customer by the financing company to be too intrusive and may hinder the growth of the business with that customer. If this would be an issue, one can simply turn to A/R Financing.

account receivable fincancing

account receivable fincancing

International Letters of Credit

Does your business export or import goods? International letters of credit are a type of Asset Based Lending financing whereby a businesses can facilitate or guarantee payment in domestic and international transactions. Troy Business Group provides access to this business financing product. Therefore here a few items Troy would like to inform businesses in regards International letters of credit.

International letters of credit, although common, require a detailed understanding of the process. International letters of credit are often called “commercial letters of credit.” For international trade, the commercial letter of credit is the primary mechanism for providing payment for international goods. The International Chamber of Commerce publishes rules and regulations governing use of commercial letters of credit, while the United States Uniform Commercial Code provides rules governing domestic letters of credit. The commercial letter of credit document provides in detail, the evidence the beneficiary must present to the issuing bank, for money to be transferred from the issuing bank to the advising bank in order to complete the transaction. Once the letter of credit is in place, the seller ships goods to the buyer. Once the buyer receives the goods, the seller presents all the documents required in the letter of credit. Once all of the documents are clear and in compliance with the letter of credit contract, all funds are transferred and the transaction is completed.

FREIGHT BILL RECEIVABLES FINANCING

Do you rush to haul then sit and wait to get paid? By using our Freight Receivables financing you can move those slow payers over to us. Use Freight Factoring speed up your cash flow.

You can use these funds to take on more loads, more drivers, and/or expand the business. Whether your a carrier or a broker, as long as you are located in the US or in Canada, the Freight Receivables Financing may be just right for you.

account receivable fincancing

account receivable fincancing

construction factoring

Are you a subcontractor who is stuck on an average Net 30, 60, or even 90 days, before you get paid for a job by a general contractor or a commercial client? Delays in payments can create cash flow problems that lead to ripple effects ranging from how to pay employees, down to construction suppliers.

Please make sure you meet one of our top requirements – subcontractors must invoice a minimum of $150,000 per month), then construction factoring can get your invoices a lot quicker than they are today. This solution provides you with immediate funds to put back into the business and take on more projects.

Here are just some of the types of subcontractors that can benefit from our services:

  • Plumbing Subcontractors
  • Landscapers
  • Roofers
  • Excavators
  • Drywall installers
  • HVAC Contractors
  • Electrical Contractors
  • Paving Companies
  • Construction Staffing

PROGRESS PAYMENTS

In the construction world sub-contractors are typically at the mercy of many other factors beyond a subcontractors control in order to be paid for the sub-contractors portion of work on a construction project. One tool that Troy Business Group has available for it’s subcontractor clients are progress payments. Progress Payment Financing is a type of Asset Based Lending financing product that provides a partial payment that covers the amount of work that has been completed up to the point of invoicing. There are several ways to structure these payments. The most common ways of billing for progress payments are:

  • Billing by stage
  • Invoicing by percentage of completion

For example, a subcontractor using the percentage of completion method could send an invoice when 30%, 60%, and 100% of the project is completed. Obviously, this billing method assumes that the contract allows them to invoice to match various levels of the project completion. Change orders can and will affect the amount a business can be advanced on a specific invoice due to the fact invoices under change order are harder to verify.

Equipment Leases​

account receivable fincancing

INVENTORY FINANCING

Inventory financing allows you to use your inventory as leverage for a working capital line of credit. This can help improve your company’s cash flow, whereby you can use it as you see fit. This type of financing is useful if your customers credit terms tie up your cash flow, and you need to grow the business before your current inventory is sold. The lender funds inventory by advancing up to 80% of its appraised value.

Once one of our lenders come out and conduct an appraisal of your equipment in order to determine it’s true net value. Our lenders either use the Net Orderly Liquidation Value (OLV) or the Forced Sale Liquidation Value (FLV).

Note that the OLV and FLV are usually lower than the market value. This can affect your ability to leverage your inventory. Then your business is awarded a line of credit that is maximum 80% of that (OLD or FLV).

Supply Chain Financing

Supplier financing is a form of Asset Based Lending that allows manufacturers, retailers and distributors to purchase inventory or fulfill large orders. It works by partnering with a supply chain finance company that extends you trade credit, and it acts as an intermediary between the business and it’s suppliers. This allows small to midsize business to make larger inventory purchases than their means afford at the time or it allows them to purchase inventory on extended terms. In the same way the larger and multi-national corps are able purchase in bulk or on terms.

The primary way that Supply Chain Financing works for SMB’s is when a small to midsize business wants or need to purchase inventory. The business will place the order via a Supply Chain Financing company vs going direct to business suppliers. The Supply Chain Financing company, will on the business’ behalf, place the order with their supplier. The Supply Chain Financing firm will handle payment and most of the time the logistics for the delivery of goods to the business.

Once your supplier finalizes the order by producing and delivering the goods to the business being financed, the Supply Chain Financing company issues an invoice to the borrowing business allowing the business to now receive inventory today and pay for it down the road. The invoice from the supply chain finance company is payable on net credit terms (usually 30 to 60 days).

Equipment Leases​

Equipment Leases​

equipment leases

While your business is growing and expanding, so do your needs for additional or updated equipment. Regardless of size, companies share a common denominator – cash flow is king and queen. It does not make a difference if the business is flush or cash strapped.

Companies large and small turn to financing equipment. Especially when taking into account that a new equipment lease vs an outright purchase can free up cash flow. Save your Aces up your sleeves and do not tie up precious working capital or bank lines. The smart money will tell you that it is best to let the equipment benefits pay for themselves.

LEASE BACK FINANCING

Lease Back Financing against existing equipment often called Off Balance Sheet Financing, is a type of Asset Based financing in which business’ as the owner of the existing equipment sell the asset or property to a leasing firm and, at the same time, lease it back (as a lessee) on a long-term basis to retain exclusive possession and use. Although this arrangement frees capital tied up in a fixed asset, the original owner loses the depreciation and tax benefits as that now falls to the benefit of the financing firm. Troy Business Group can provide access to leaseback transactions depending if certain criteria can be met by the business and its equipment. For example but not limited: credit strength of the borrower, the age and type of equipment, how much they want, purpose of the transaction.

Equipment Leases​

Success in business requires training and discipline and hard work. But if you’re not frightened by these things, the opportunities are just as great today as they ever were.

– David Rockefeller

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