Keep your business financially afloat through COVID-19

Business Financial Support Coronavirus
Business Financial Support Coronavirus

During these trying times, we understand the uncertainty you may feel about your business and its future. Unfortunately, a business in financial distress can quickly discover that their options for financing are limited. Financial partners eager for business when times were good, often offer few solutions when challenges arise. SouthStar Capital wants to offer financial support through this ordeal.

If you are unable to make your payroll or cover operating expenses during the Coronavirus quarantine, we may be able to help. SouthStar offers a wide range of funding products, allowing us to customize the right solution to keep your business afloat. We are also a direct lender, meaning we don’t rely on bank financing and we make our own credit decisions.

If you are considering filing for bankruptcy, we can also provide DIP Financing. DIP (debtor in possession) Financing is for businesses that are in financial distress that plan to file or have filed for Chapter 11 bankruptcy to protect themselves from creditors. It is used to enable the reorganization of a business by accessing capital to support operations, while their bankruptcy is under way. DIP Financing will help your business get back on track, provide restructuring support, and return to being profitable.

Below, is a list of our products, linked to more information about each solution. If you or your client need financial support through this ordeal, contact us today to discuss our funding options.

Contact us today to learn more!


Accounts Receivable Financing Case Study

Accounts Receivable Financing Case Study

American Staffing, Inc. Case Study

This case study shows how Accounts Receivable Financing can be used to solve the cash flow problems of a staffing company. To protect client privacy, we have changed some details (including their name) in this business case. Also, the numbers have been simplified to make the case study easy to understand, but the key facts and lessons remain.

The Challenge

American Staffing, Inc. (ASI) is a staffing company that matches large corporate clients with qualified candidates to fill open positions within the corporation. Although ASI is a small company with just a few employees, they have secured three large contracts. However, between start-up costs, payroll, and operating expenses, the company only has $10,000 left in the bank.

Their three contracts each pay $100,000 per month for services, but the invoices are paid 30 days after services have been delivered. The company’s payroll is $150,000 per month and an additional $30,000 dollars per month is spent on other general business expenses. The table below provides a simplified snapshot of ASI’s financial position:

Before AR Financing Case Study

Although the company is doing relatively well, it is low on cash and won’t be able to meet their general expense and payroll liabilities, causing them to have a cash deficit of $170,000. ASI will have money coming in as soon as their invoices are paid, but in the meantime, they are unable to meet their expenses.

Solving the Problem with AR Financing

ASI could solve their current cash flow issue with a business loan, but there is a problem with this approach. Banks don’t usually provide financing to small companies unless they have substantial collateral and a track record of profits, ASI has neither. Also, getting bank financing can often take a while. This won’t help a company that needs funds quickly.

AR Financing can solve the problem by financing slow-paying invoices from credit-worthy commercial clients. This solution allows ASI to turn a portion of their slow-paying receivables into immediate cash, usually up to 90% of outstanding invoices is advanced to the client. The remaining 10% is held as a reserve until the invoices are paid in full. At that time, the transaction settles.

The following table shows a summary snapshot of ASI’s financial position after Accounts Receivable Financing has been deployed.

Immediately After AR Financing Case Study

The first thing to notice is that the cash deficit turned into a cash surplus of $100,000. The $30,000 held as reserve will be returned, less the finance fee, once ASI’s customers pay the invoices. The company now has enough cash to pay its operating expenses and payroll.

The Biggest Benefit - Growth

The biggest benefit from this transaction is not immediately obvious from the post-AR Financing snapshot. ASI previously had been unable to take on new clients, even though demand for their services were high. They simply could not afford to offer commercial credit terms to their new clients, mainly because it would require an increase in employees and associated general expenses. Unfortunately, growth was not an option, and even survival was questionable.

However, Accounts Receivable Financing changed their circumstances. After implementing the financing facility, they were able to take on two new clients, which increased A/R by $200,000. ASI was able to easily pay for the increase in payroll and other expenses thanks to their AR financing line. The following table shows a summary snapshot of ASI’s growth financial position.

AR Financing Growth Case Study

Why did AR Financing work so well for ASI?

ASI was able to achieve a financial turnaround relatively quickly using Accounts Receivable Financing. The company had a number of things going for it which helped this happen.

First, the company was well run and very profitable from the start. As is shown clearly in the second table, they had a sizable cash surplus after the first financing transaction. In fact, if they had chosen to stay at their current size, they could have stopped using AR Financing soon after building an adequate reserve – a process that would have taken less than a year.

ASI also worked with three large corporate clients, all well-known, brand-name companies who had great commercial credit. This simplified the process of financing their invoices because the collateral was excellent.

Above all, ASI’s management was smart. They were able to leverage their AR Financing line into a growth tool that allowed them to take on new clients. It wasn’t long before they were only financing invoices from new clients, as they no longer needed funding for their initial three clients. Basically, AR Financing allowed them to finance their growth.

Transitioning to the Bank

The one challenge for ASI was that the cost of Accounts Receivable Financing was higher than the cost of more traditional financing options, like a business loan. This was not an issue when they had a cash flow emergency and AR Financing was their only option. However, management was smart and used their receivables financing line as a stepping stone to traditional financing. Within two years, ASI was able to meet the underwriting requirements of a bank and secured a sizable line of credit. They used the line of credit to replace the AR financing line, which further increased their profitability.

Learn more about Accounts Receivable Financing with SouthStar Capital!


10 Questions: Is Accounts Receivable Financing right for your business?

Is Accounts Receivable Financing Right for You
Is Accounts Receivable Financing Right for You

When considering if Accounts Receivable Financing is the right solution for obtaining working capital for your business, ask yourself these 10 questions:

  1. Could you increase sales with more working capital?
  2. Do you have to scramble at the end of the week or month to cover your payroll expenses?
  3. Is your business in growth mode?
  4. Have you been turned down by a bank for financing?
  5. Do you have projects that you could be bidding if you were assured the cash flow required would be available to you?
  6. Do you have challenged financial history or personal credit issues?
  7. Do the majority of your clients pay over 30 days?
  8. Do you have to be selective in choosing customers because they do not pay on time?
  9. Does your business rely heavily on inventory, requiring large capital expenditures to fulfill orders?
  10. Do you want a minimal amount of required management of cash, instead of the constant day-to-day advances of a line of credit?

If you answered YES to one or more of the above questions, then you are definitely a candidate for Accounts Receivable Financing.

Learn more about Accounts Receivable Financing with SouthStar Capital!


SouthStar Capital, LLC Acquires inFactor Capital, Co.

SouthStar Capital Aquires inFactor Capital

SouthStar Capital is actively seeking portfolios in the Specialty Finance sector.

SouthStar Capital Aquires inFactor Capital

SouthStar Capital is excited to announce the acquisition of the Charleston, South Carolina based company, inFactor, effective May 3rd of 2019. SouthStar acquired inFactor’s factoring portfolio and commercial customer accounts, which will operate under SouthStar’s brand moving forward. This acquisition offers an exciting opportunity for SouthStar to strengthen and expand its service offerings in the Factoring and Asset Based Lending sectors. Part of the portfolio included a factoring line of $10MM to one of the country’s largest IT staffing and training firms. SouthStar looks forward to acquiring more Specialty Finance, Factoring and Asset Based Lending companies in the near future.

“We are pleased to add inFactor’s portfolio to our ‘roll-up’ of existing companies. This transaction represents SouthStar’s intention to grow in the Specialty Finance space. We are actively seeking portfolios in the Asset Based Lending, Leasing, and Factoring spaces, to add to our growing group of companies. SouthStar has positioned itself with the ability to acquire existing portfolios quickly and efficiently, while providing world class service to our clients. Our goal is to build the largest premier Specialty Finance company in the US, and we have spent the last 12 years refining our systems, software, and personnel to support our growth in this space,” says SouthStar Capital’s President, Bernard Linney

Click below to read more!

The Cost of Invoice Financing

Cost of Invoice Financing
Cost of Invoice Financing

Have you ever considered invoice financing, but thought the cost would be prohibitive? Well, maybe the question should be what is the cost of not financing your invoices? If you’re turning down a large job or contract because you don’t have enough working capital, think about the associated revenue your business is missing out on. Consider not just the lost opportunity cost, but also the growth opportunities your business is missing due to a lack of cash flow.

With invoice financing, we advance up to 90% of your outstanding invoices, so you get the capital you need right when you need it. Our funding decision is based on the credit quality of your clients that owe on the invoice, not your credit score. Once the invoice is paid, we remit the balance back to you, minus our fee. There’s no lump sum loan amount to repay or minimum monthly payments to make. Invoice financing simply gets you your money faster, providing you payment within 24 hours of submitting your invoice for your delivered product or service.

SouthStar is more than just a source of steady capital. You can also think of us as your accounts payable and accounts receivable departments. We’ll handle your billing and keep up with which customers have paid and which are outstanding. This is at no additional cost and saves you from hiring office staff to do the job. We also provide credit checks on your new clients to ensure the credit-worthiness of your new prospects.

Contact us today to learn more!

Does Your Business Have Cash Flow Problems?

Business Cash Flow Problems

SouthStar Capital takes a non-traditional approach to funding. We think outside the box and take a different perspective than many of the lending sources you may have been turned away from. We offer an alternative lending approach, where our decision is not credit driven and our qualifications are not customary. If you have exhausted your financing options, don’t give up, because we can help.

Business Have Cash Flow Problems

The questions below address concerns we commonly hear from businesses like yours. If you answer YES to any of these questions, SouthStar Capital can provide a solution.

  1. If you had access to more working capital, could you grow your business?
  2. Limited or challenged credit history?
  3. Turned down by the bank?
  4. Growing faster than your bank is comfortable with?
  5. Awarded a larger project than you can financially handle?
  6. Need cash flow fast, within days, not weeks?
  7. New in business?
  8. Slow paying customers?
  9. Behind in taxes or have tax liens?
  10. Struggle to make payroll?
  11. Worried about having to give up equity in your company?
  12. Need new or upgraded equipment?

If you answered YES to any one of these questions, contact us today to learn more about SouthStar’s Funding Approach.

3 Ways a Line of Credit can Benefit your Business

Benefits of Line of Credit

The 3 benefits a Line of Credit can bring your business.

3 Benefits of a Line of Credit

It’s a security blanket for your business. Your line of credit is always there when you need extra cash. Plus, a LOC is flexible, giving you the ability to be more flexible about your business decisions.

You can use a line of credit for almost any business need. That includes making payroll, ordering more inventory, purchasing equipment, hiring staff, or just getting through a slump when business is slow.

It can help you build your business credit score. Although we don’t base our funding decision on your Dun & Bradstreet (DNBI) Report, improving your credit helps you qualify for better rates and larger amounts on future financing options.

5 Reasons to use Invoice Financing to Grow your Business

Grow Your Business with Invoice Financing

The 5 reasons to grow your business with Invoice Financing.

Grow Your Business with Invoice Financing

Easier Qualification

Qualifying for a bank loan can be strenuous and time consuming, especially if you have a challenged credit history. Invoice Financing is different, in that the qualification process is based on your customers’ credit, not your own.

Get Paid Faster

Why should you have to wait 30, 60, or even 90 days to get paid by your customers? Invoice Financing allows you to unlock the cash within your business immediately, making growing your business easier.

Add Flexibility

Invoice Financing is a means of accelerating payments you’ve already earned. You can choose to finance invoices as you please, and there’s no restrictions on the amount of invoices you submit. You can also use your financing as you see fit, whether it be to order new materials, purchase new equipment, or meet payroll.

More Affordable

Compared to alternatives, such as merchant cash advances and title loans, Invoice Financing is an inexpensive way to fund your business. No extraneous fees, just a set rate.

Receivables Management

Working with an asset based lender, like SouthStar, helps reduce the various expenses associated with processing invoices and collections. We will handle your collections, so you can concentrate on managing your business and not having to worry about day-to-day accounts receivable.

Best Factoring Company of 2018

Best Factoring Company

FactoringClub's 'Best Factoring Company of 2018' Award

Best Factoring Company

We are very excited to announce that SouthStar Capital has been awarded the ‘Best Factoring Company of 2018’ by the FactoringClub! This award was based on SouthStar’s terms and features, customer service, location, and overall excellence.

Invoice Factoring with SouthStar

Whether you are an established business or just getting started, insufficient cash flow can cripple your operations and growth capabilities. Traditional institutions often do not view your company’s Accounts Receivable (invoices) for what they are, an asset! SouthStar Capital does not see through the eyes of traditional lending institutions and can turn your invoices into working capital. This takes away the concern of making payroll, paying vendors/suppliers, and securing growth capital, so you can focus on what’s important, growing your business.

When factoring with SouthStar, we will advance up to 90% of the amount of your outstanding invoices. After initial funding, you will receive working capital within 24 hours of us receiving an invoice. We do not impose limits on your monthly receivables, so this process can be repeated as often as you produce an invoice. Factoring is very beneficial to companies whose clients pay on terms. Instead of waiting 30, or even 60, days for your clients to pay, factoring allows you to free up cash flow for immediate use. Factoring is not a loan, so no debt is added to your balance sheet and the funds are unrestricted, so you have the flexibility to use them how you wish. (Click to learn more about the 5 simple steps of Invoice Factoring.)

What to Expect with Invoice Factoring

As client of SouthStar’s Invoice Factoring solution, you will be assigned a personal account manager who will handle collections, payment processing, and customer credit approvals, allowing you to focus on your business. With factoring, we look at the credit history of your customer, not your company or personal credit history. Years in business does not influence our decision to finance, making factoring great for start-ups. Once established with SouthStar, you will receive same-day funding on submitted invoices. This gives you access to unlimited working capital, right when you need it. Factoring also allows you to extend longer payment terms to clients and grow your business. See what our clients have said about SouthStar’s Invoice Factoring solution.

Don’t be Fooled by Online Lenders

Safer Than Online Lenders

A Safer Option than Online Lenders.

Safer Than Online Lenders

We know that business owners can get in a pinch financially and feel they need to resort to online lenders for fast cash. Many of these online lenders, such as a Merchant Cash Advance (MCA), offer quick funding with little paperwork, but this decision can have long term effects on your finances. These online lending structures may be based on your business’s future sales, making it a higher risk funding option with a greater liability on your balance sheet. Many of these online options also have very high interest rates, forcing you into a longer payoff period.

We provide a safer financing option.

SouthStar Capital provides a safer alternative to online lenders, through Asset Based Financing. Rather than looking to future sales, like Merchant Cash Advances, or to past performance, like banks, we provide working capital solutions based on your assets, such as accounts receivable, purchase orders, contracts, and equipment. By advancing against your assets, we are able to a provide a more responsible and reliable financing option, without adding debt to your balance sheet.

We are also a fast source of funding, with same day approval, closing in 2-5 days, and 24 hour funding. Unlike online lenders, the financing we provide doesn’t just put a band-aid on the problem. We have a dedicated account team to work with you in structuring the best solution for your business’s current and future growth. Our goal is to provide the resources and support needed to grow your business to a stable and healthy financial position.