Leveraging Your Brand to Secure Debt Financing
In lending to smaller enterprises, US Capital Partners leverages the asset value of intangibles, including company brands.
Today’s most promising companies are built on intangible assets, especially their brands. BrandZ, the world’s largest brand equity database, estimates Google’s brand value, for instance, at about $113.7 billion compared to a current market capitalization of approximately $290 billion. In many cases there is more value in the brand and other intellectual property of a business than in its tangible assets, such as machinery, raw materials, land and buildings, or its financial assets such as receivables and investments.
Brand Asset Value
In a world of abundant choices, brands take on special importance in the way they influence customers. At its simplest, brand equity is how customers recognize why a business is different and better than the alternative. The experience of customers, repeated over time, builds brand equity and is what drives them to make repeat-purchases and to buy additional products with the same brand. It is what generates loyalty in the face of market competition, premium price, and even the occasional product or service bump in the road. A strong brand also creates brand advocates.
Private equity firms have been valuing brands for many years in providing equity financing, especially for mergers and acquisitions. What is far less common is the leveraging of brands for debt financing.
Why Many Smaller Businesses Remain Underserved
Many smaller entrepreneurial companies are still struggling to secure the financing they need to grow, five years after the financial markets crashed. According to Forbes, a report from TechAmerica Foundation points out why—and it’s not what you might expect. Our economy has been shifting to one in which intangible assets now represent a greater share of the overall value of job-creating companies. Lenders, the report points out, have simply not caught up to this yet.
Leveraging Your Brand as a Business Asset
US Capital Partners is continually on the lookout to provide smaller enterprises with new ways to finance innovation and expand their businesses. One method is through intangible asset-based lending, especially financing leveraged on the value of a brand.
“Recognizing the cash-flow around a brand, US Capital Partners has been bringing brand asset value into the debt financing equation for several years now,” explains Jeffrey Sweeney, CEO and Managing Director at US Capital Partners. “The firm specializes in providing financing for small to lower middle market businesses, especially through asset-based loans and cash-flow term loans secured on the enterprise value of a business. In structuring optimal financing for its clients, US Capital Partners takes strong, well-husbanded brands into account to increase loan amounts for its clients.”