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 $159 billion, compared to a current market capitalization of approximately $364 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.
One Reason Many Smaller Businesses Remain Underserved
Many smaller entrepreneurial companies are still struggling to secure the financing they need to grow, six years after the financial markets crashed. One important reason, as Forbes has pointed out in the past, is that 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 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.”
“We are extremely pleased with this intelligently structured, scalable financing, which was designed specifically to support our business growth,” said David R. Garcia, President and CEO at Hans Drake International. “Recently, there has been a strong increase in demand for our quality product lines from new domestic and international retailers and distributors. This new credit facility will provide the additional working capital we need to increase our inventory and fulfill new orders.”