What Is Recapitalization Financing?

by Crestmark 12. September 2012 06:15

There are many different ways to fund a business. Starting out, you'll have the option to lean heavily on venture capital or similar investment vehicles, but you may also choose to finance through more traditional loans, or potentially even to self-finance. But as your business develops, you may discover that your initial financing method isn't the one that best suits your current needs. In this kind of situation, it'll be time to look at recapitalization financing.

The Funds You Need To Restructure

Recapitalization financing is, at its heart, a way of re-organizing the way the finances of your company are structured. This can mean consolidation, but it often means adapting payment structures to better fit your current method of production. For example, it could mean switching from a more debt-oriented structure to a line-of-credit oriented one.

Changing Your Business Capital

At Crestmark, we often help our clients transfer to lines of credit as their main source of business capital. We offer four main types of line of credit. The first is an asset-based line of credit, which is secured by inventory and/or receivables. Accounts receivable financing is another common choice. This kind of line of credit is secured purely by invoices with every invoice being considered individually. Finally, the last two common options are both types of invoice factoring. Factoring offers flexible financing that functions very similarly to a line of credit but is not technically considered one. Under an invoice factoring agreement Crestmark structures your funding facility based on accounts receivable/invoices. The invoices are purchased at a discount to provide immediate availability of funds to your company

If you're interested in learning how Crestmark can assist you with recapitalization, don't hesitate to contact us. We're always looking to help business owners looking for financial solutions. 

Crestmark Gives Back by Helping Habitat for Humanity

by crestmark 13. September 2011 05:39

At Crestmark, we believe in helping the communities where we live and work.  Recently, some Crestmark employees and their families were able to put that into action while helping Habitat for Humanity in Southeast Michigan.  They took part in Habitat for Humanity’s house rehabilitation in Madison Heights, Michigan on Saturday August 13, 2011. This year marks the fourth year that Crestmark’s Troy office has been involved with Habitat’s efforts in Southeast Michigan.  Fourteen Crestmark employees from various departments helped to complete a new home in Madison Heights that will be turned over to its new qualified homeowner in September.

Crestmark is proud to give back the communities in which they work, whether by picking up a hammer or broom; or by assisting with financing for a business in need of working capital with solutions like asset-based lending, accounts receivable financing and factoring.

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How Crestmark Helps

by Michelle 25. August 2010 04:48

Today we are going to begin a series in our blog on How We Help.  Occaisionally, over the next weeks and months I will post articles and comments from our clients on how Crestmark was able to help them with their specific needs.  Today’s example is from a Staffing company on the east coast.

The company is a very well known and respected temp medical staffing company located on the East Coast.  They provide a variety of medical professionals including LPN’s, RN’s and physical therapists to hospitals and nursing homes. 

They began to see significant decrease in their business from about June 2008 through January 2009.  The leadership took very proactive steps to reduce their overhead and business expenses, a process which they continue to do.  Due to management taking an active role in managing to a new sales forecast they have begun to turn the corner and are projecting a breakeven 2009.  Leadership felt strongly that they could post positive net income during 2010. 


Problem:
Their previous lender became nervous about the relationship after they experienced 50% drop in sales from the previous year.  The losses caused their lender to become very restrictive with their credit facility and availability as well as imposing some very strict financial covenants.  This put the company in a very precarious position; they had a drastic drop in business, they were experiencing longer than usual turn on their receivables, and their lender was restricting their credit line.


Solution:
They first came to Crestmark in June, 2009.  The client said he knew from day one talking with Crestmark, that we were different than the other companies he had spoken with.

We were able to quickly review and provide them with feedback on what we would be able to do for them.  Our solution was an AR Loan with an available credit limit that would give them more than adequate cash flow and some very welcome breathing room.  In addition we offered a 90% advance rate which was more aggressive than the previous lender, the new relationship was completed by the previous lender’s deadline

All of this has allowed them to continue to make necessary improvements to processes and expenses while being confident that they have a lender who will be there with them step by step to bring them through difficult times and ultimately to profitability once again.

Accounts Receivable lending still good option

by Michelle 10. August 2010 11:15

I was recently reading an article about access to credit for small businesses and thought, geeze…what’s a business owner to think these days?  Are things getting better?  Are banks lending…or not?

Here are a couple of quotes from the WSJ.com article, “For Small Business, Slow Gains In Credit,” dated July 13, 2010;

“Overall, the survey data seem to suggest that current economic conditions for small businesses, though still quite challenging, are less dire than they were in 2009.” This is a quote from Robin Prager, and assistant research director at the Fed.  She was quoted recently at the Fed’s forum for small business lending.  Sounds promising, right?

Well, not so fast…just 2 paragraphs later in the same article, Fed Chairman Ben Bernanke is quoted as saying, “The formation and growth of small businesses depend critically on access to credit.  Unfortunately, those businesses report that credit conditions remain very difficult.”

So, as a business owner who needs credit to start or grow their business I’m sure many are left wondering, “I can perhaps, maybe get a loan or not with my local bank…they more or less may or may not lend me a small amount of money???”

Sometimes I think we would all be better off reading tea leaves…but I digress.  On to the main point…

All of this uncertainty leaves many small business owners deciding not to hire or grow until they can get a better feel for what they can reasonably expect from lenders in their area.  And to speak to the other side of this equation, local and regional banks are nervous about what types of businesses to lend to due in part to the many regulatory rules and a general perception that in these times any risk may be too risky. 

The good news is that accounts receivable lending through factoring or asset based lines of credit remains an excellent option for small to medium sized businesses who don’t qualify for a traditional loan.  Our industry continues to see allot of activity and we are actively working to help as many business owners as possible.

In these perplexing times alternative lenders are a good option.

Crestmark announces our new website

by Michelle 2. August 2010 11:21

After almost a year of hard work and collaboration we are very excited to launch our new, updated website!

Crestmark is an FDIC insured financial institution which specializes in providing working capital through accounts receivable lending to small and medium sized businesses across the country. The bank was originally founded in Troy, MI and in recent years has expanded it’s footprint through a series of acquisitions. These acquisitions brought in already established, successful accounts receivable factoring companies. All of these events lead to the need to create a newer, updated and more comprehensive website.

We hope that you will find the new site informative and helpful! Within the pages of the site, you will find explanations of the various types of solutions that we offer; accounts receivable factoring, asset based lines of credit, and accounts receivable loans. I think you will also find that we are very diverse in the industries we serve; staffing, manufacturing, distribution, apparel, government contractors to name a few.

So…take a look, and let us know what you think. We think you’ll be pleased!

 


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