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Small Business Lending
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Jeffrey Sweeney is an investment banker with years of experience in direct lending and corporate finance for small- to middle-market companies. He is the CEO and Managing Director of US Capital Partners, an innovator in small- to middle-market business lending. US Capital Partners has been providing prompt, innovative, and reliable financing solutions across the United States and abroad for more than a decade.

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Entries in alternative small business lender (10)

Tuesday
Aug142012

Bridging the Disconnect Between Banks and Borrowers

 

US Capital Partners’ approach to small business lending bridges the divide between traditional banks and borrowers, thereby providing optimal and efficient financing solutions.

Traditional banks have been eager to limit their loan exposure, but have simultaneously been under strong and mounting pressure to lend to small businesses. Many have responded to these conflicting pressures by reporting that there are simply not enough smaller businesses looking for loans that meet their lending criteria. Meanwhile, smaller businesses continue to report that they are being turned down for loans, or that loans have been called in early or availability suddenly reduced—often despite good business performance.

Smaller Businesses Seeking Financing

This seeming paradox in fact highlights something important: an ongoing divide between traditional banks and borrowers. Evidence suggests that there continues to be strong demand for loans. According to one recent report, 39% of businesses with annual revenue of $5–100 million attempted to raise outside financing in the past six months. The difficulty is that many such businesses don’t know how to find the right lenders for their particular needs. Also, when they do approach a lender, they often don’t know how to present their application in the most favorable way, from a lender’s perspective. As a result, their application is rejected, or they don’t receive the best availability and terms.

Traditional Approaches to Small Business Lending

Meanwhile, traditional lenders may not always take the trouble to properly understand a business. This is because they tend to view themselves solely as “lenders,” rather than as “business partners.” Consequently, some banks will fail to adopt a strategic perspective that furthers the customer’s long-term interests. As a result, they may set up financing structures that are short-term in outlook and that in the end constrain the company and hinder its growth. Also, they may ask for more collateral than they actually require, or impose covenants that create unnecessary problems for the business later on.

Adopting a Partnership Approach

US Capital Partners, LLC recognizes that what small to lower middle market businesses need is not simply short-term financing, but an ongoing partnership that allows them to prosper and grow. A lender that understands your business is less likely to bail out if your company meets any unexpected challenges down the road. By understanding your business, US Capital Partners is also able to maximize your availability. US Capital Partners takes a strategic approach and places its best financing technicians at your service. As a direct lender, arranger, and co-lender, it has full flexibility to engineer optimal debt and equity financing solutions for your business.

If you would like to know more about how your business can secure the funding it needs, email Jeffrey Sweeney, CEO and Managing Director, at jsweeney@uscapitalpartners.net or call
(415) 889-1010.

Tuesday
Jul102012

Cash-Flow Lending: An Optimal Financing Solution for Many Businesses

Non-bank lenders like US Capital Partners are increasingly offering new creative financing options for small and lower middle market businesses. One of these is cash-flow lending.

Strong Demand for Business Financing in the Coming Six Months

The demand for financing among small and lower middle market businesses remains high. According to a report published this month by Pepperdine University, 31% of businesses with annual revenues of $5–100 million are planning to increase financing in the next six months. Among them, 61% aim to finance planned future growth or expansion, including acquisitions; 56% are looking to fund increased demand; 55% need to cover expected working capital fluctuations; and 35% want to refinance existing loans or equity.

The Rise of Cash-flow Lending

The report also states that 69% of all respondents consider it difficult to raise new external debt financing. What many of these businesses may not realize is that the financing options available to them have actually been steadily increasing. Non-bank lenders are increasingly providing financial products that offer new levels of flexibility. One of these is cash-flow lending, a form of financing in which a loan is backed by the company’s historical and projected cash flows.

When Is Cash-Flow Lending Extremely Useful?

Smaller businesses may not always have large inventories, receivables, or fixed assets, which makes it difficult for them to secure traditional asset-based financing. Nonetheless, these companies may have strong cash-flow margins and enterprise value. Typical examples include service companies and high-tech companies.

“These businesses may be in their early stages, and may not have many years of historical performance,” said Jeffrey Sweeney, CEO and Managing Director at US Capital Partners. “Traditional banks may therefore be hesitant to lend to them. However, non-bank lenders like US Capital Partners now provide cash-flow term loans to such businesses, even if they have less than $5 million in trailing EBITDA—which used to be the threshold for such loans.”

How US Capital Partners Can Help

US Capital Partners is a specialist in debt and equity financing for small and lower middle market companies. At US Capital Partners, companies with strong cash flows can expect cash-flow loans with:

  • Affordable and flexible loan structures
  • Maximum availability
  • Covenant-light structure
  • Rapid funding
Tuesday
Jun052012

Smaller Businesses Struggle with Receivables

Smaller companies are preparing themselves for growth. According to this year’s Group CFO Survey, 95% of small and midsize manufacturers intend to invest in equipment this year, and 69% are more optimistic about their financial prospects. Executives of midsize companies, Deloitte also reported, intend to grow their companies this year by innovating, capturing higher-value customers, boosting revenue per customer, and selling abroad.


Source: Merrill DataSite

Firms Struggle with Receivables

All of this, however, is taking place in a less predictable environment. Amid ongoing macro-economic uncertainty, one serious concern for many smaller businesses is with their receivables. The CFO Journal reported recently that midsized companies are struggling to manage their receivables, with 47% of respondents saying that “larger companies have used their bargaining power to force them to accept slower payments.” For smaller companies, this can be a significant problem, impacting working capital and stalling expansion.

How US Capital Partners Can Help

Today, smaller businesses in this predicament actually have more financing options available to them than ever before, helping them mitigate prolonged collection periods. Getting the right financing help quickly in this situation can ensure that your business continues to have the working capital or growth capital it requires.

US Capital Partners focuses exclusively on providing debt and equity financing for small and lower middle market businesses, including companies that may be struggling with their receivables. The firm’s extensive knowledge in this sector size enables it to provide the best possible financing for these businesses.

Recently, for instance, US Capital Partners put in place a $2 million accounts receivable line of credit for Morgan Drexen, Inc., which provides integrated support systems to over 50 US law firms. US Capital Partners also secured a $500,000 accounts receivable line of credit for Model Home Interiors, Inc., a leading designer and decorator of award-winning model homes. In both cases, US Capital Partners looked at every aspect of the business to design optimal and custom financing solutions for its clients.

If you would like to know more about how your business can secure the funding it needs, email Jeffrey Sweeney, CEO and Managing Director, at jsweeney@uscapitalpartners.net or call
(415) 889-1010.

Tuesday
May292012

Debt vs Equity in Mergers and Acquisitions

Merger and acquisition (M&A) activity is expected to surge over the coming year. According to a recent report by Deloitte, the number of middle market business executives who consider their companies “very likely” to engage in an acquisition jumped from 11% to 18%. This is supported by a survey by Merrill DataSite (see bar chart below). As many as 86% of respondents definitely plan to expand through some combination of internal growth and/or acquisitions in the coming year.


Source: Merrill DataSite

What is Driving Acquisition Activity?

Several factors are driving the increase in M&A activity—including a push to bolster corporate revenue, coupled with the buying power of stronger corporate balance sheets. According to Merrill DataSite, 32% of respondents said the major objective of their company’s future acquisition strategy will be to increase market share in an existing market or product.

When is Debt Preferable to Equity for a Business?

Last year, The New York Times reported how some entrepreneurs manage to make million, if not billions, more than others by being careful not to sell too much of their business too soon. This principle is especially pertinent for companies considering a merger or acquisition. If you are a business owner, debt financing may be preferable to equity if you:

  • Do not want to substantially dilute your ownership interest in your business at this stage.
  • Do not want to relinquish a share of future profits of the business.
  • Have limited ability to raise equity due to size, market conditions, or dilution impact.
  • Do not want to relinquish operating control or strategic direction of your company and/or its Board of Directors.
  • Want to shield part of your business income from taxes. (If you finance your business using debt, the interest you repay on your loan is tax-deductible.)

How US Capital Partners Can Help

Since 1998, US Capital Partners has been providing debt and equity financing to small and lower middle market companies in the US and abroad. US Capital Partners provides growth capital term loans from $500,000 to $30 million for M&A initiatives, as well as for expansion generally. This offers a minimally dilutive option to a straight equity raise. US Capital Partners can also structure an optimal combination of a growth capital term loan together with some equity financing, thereby ensuring that more of the company remains in the hands of its founders or sponsors.

 

If you would like to know more about how your business can secure the funding it needs, email Jeffrey Sweeney, CEO and Managing Director, at jsweeney@uscapitalpartners.net or call

Tuesday
May012012

US Capital Partners Assists Baby Care Product Company

Developer of Baby Care Products | $1,000,000, RefinancingU.S. Capital Partners (USCP) works to secure the best possible financing for clients by broadening our range, serving as lead arranger, direct lender, and co-lender. We employed this strategy recently with a business client that was in need of access to more flexible funds in order to expand its operation, and we were able to secure a $1 million revolving line of credit for them.

Our experienced and skilled financial team at USCP was successfully able to secure the $1 million revolving line of credit for a baby care product company because we made it our business to understand their business; in other words, we conducted a thorough survey of the company’s product, service, market, and business model, in addition to their principal net worth, practices we often employ with our clients to accurately determine their needs and the best possible resources to attain those needs. This particular client required timely access to additional working capital in order to introduce new marketing and sales initiatives, and we were able to help by refinancing their current debt with a commercial bank that is in and we were able to provide that for them in a prompt manner.

Based in California, this baby care product company creates, markets, and distributes fashionable products for babies and parents (primarily babies), including luxury blankets, burp cloths, bibs, and hooded bath towels.

To view more of US Capital Partners recent transactions visit our website at www.uscapitalpartners.net/transactions.html.

U.S. Capital Partners investigates all aspects of a company to craft optimum, customized financial solutions for our customers. We are often capable of increasing opportunities to achieve a successful resolution by discovering credit enhancers and ways to mitigate risks to credit. If you or your company are struggling to secure a credit line that could help provide your company the working capital it needs, give us a call at (415) 899-1010 or visit us online at www.uscapitalpartners.net. Our team of experienced professionals is ready to discuss your financing needs with you.