Author Archives: McLean Wilson

 SouthStar is excited to announce a recently closed transaction

$1,000,000 Receivables Line Coupled With a $500,000 Purchase Order Line Fuels Growth for a Manufacturing Company in Florida

Challenge

The Manufacturing Company recently brought an exciting new product line to market which resulted in sales increasing by 100% month over month over month!  In order to keep up with demand the Client utilized what cash they had in the bank to buy more equipment to keep up.  While this was great it left them with little to no money to pay suppliers which left them with great potential and many orders but no raw goods to create a finished product.  To make matter worse they did not have terms with their suppliers as they have only been in business for 6 months and their existing Financing company was not willing to deviate outside of the box.

Solution

SouthStar examined the company as a whole and took into account all asset classes to include equipment, accounts receivable and purchase orders.  SouthStar offered a large Receivables Line that will helped the company reach its potential and also collateralized the equipment of the Company in order to offer a $500,000 purchase order line to assist with purchasing raw goods and funding payroll.

Results

Cash is no longer an issue and the Company can focus on sales and operations not on how they are going to fund their day to day operations.

As capital requirements increase, the cost of capital and liquidity increase. This puts strong pressure on bank margins. When that happens some business development trends emerge and many small businesses are left out in the cold to fend for themselves. This leads business owners to Merchant cash advances, and loan sharks. In order to prevent that you need to see and know your options.

Trend #1: More fees please.

Mid-sized and large companies are getting beat to death with derivatives and other capital markets solutions and all businesses are getting flooded with the treasury management sale. It’s not really less business development focus on credit as much as it is a massive ramping up of the other stuff.

Following these strategies, banks are tweaking their client profitability models to require more “cross-sell” or non-interest income as opposed to just swooping in and doing the credit. Total relationship profitability standards are higher than in recent memory if ever. This means a potential pressure on customers to maybe buy more than what they are seeking.

SBA loans are a great example because it takes forever to get approved for one. Then you are locked into that loan until it is paid off making it nearly impossible to get financing options elsewhere. This forces businesses owners to ask for more than they need so that they have something in the bank for a later date when they need additional funding.

Trend #2: Closer monitoring of credits

Could the days of the annual review be ending? Maybe. Many banks are implementing bi-annual and quarterly reviews on even simple cash flow deals. The closer attention means that companies are struggling even more to get the funding they need when banks can only look in the rear view verses out in front to get the company the money they need to grow and not just maintain.

Trend #3: Heightened battle for credit exposure

Equipment finance groups are fighting with working capital…even treasury management department for precious, more scrutinized hold levels within the bank. And while syndication markets are frothy, always easier to sell a single investor deal than a club deal in the middle market and in some cases even with bigger companies. This can be a real problem though for asset intensive smaller business.

However there are great ABL companies out there ready to turn assets into cash or use those assets as collateral in order to purchase more assets. Most people don’t realize that their Accounts Receivable can also be turned into cash through AR financing. This is a great way to get working capital that can keep up with the growth, demand, and seasonality of your business.

 Trend #4: Commercial finance rising

Don’t take the GE thing as an indication commercial finance and other non-bank sources of capital are fading. In fact, we see the opposite. GE clearly became exhausted with the flood of regulatory crap enforced now because of their size. Most commercial finance companies do not have this obstacle. Even beyond traditional senior finance, mezz, second lien and other debt providers are growing rapidly and the run of private equity has been almost meteoric over the last few years. All that is happening because banking is not meeting the magnitude of the need. Not because they don’t want to, but because the regulation has them in handcuffs to a point. And that creates an opportunity for commercial finance resources outside of traditional banking to emerge.

SouthStar Capital is a great example of one of these companies:

Southstar Capital is a nationwide commercial finance company with our corporate offices in the Southeastern United States. We provide a full suite of working capital solutions, including Accounts Receivable, Purchase Order and Equipment Financing for new and existing businesses. We base our lending decisions on the value of your company’s assets, not your personal or business credit score/rating. SouthStar specializes in financing businesses that have been turned down by a bank. Our goal is to be your preferred and trusted source of working capital needs now and in the future.

If you ever wanna chat about how to take the trends of banking that are hurting your business and trade them for options to help grow your business then give us a call or email.

843-277-6449 or info@southstarcapital.com

We continue to grow at SouthStar and we are seeking positive, intelligent and hardworking individual to join our team.  See below for more details.

Client Relationship Specialist I

 SouthStar Capital LLC, an Asset Based Lending Group in the Southeastern commercial finance market, is now expanding and seeking a Client Relationship Specialist I for our office in Charleston, South Carolina.  We are a privately funded company specializing in providing working capital lines of credit to growing businesses from 100K to 5MM Monthly.

Our Office environment is a fun workplace, with a business casual environment often eating lunch, socializing and enjoying what Charleston has to offer.

As a member of the Operations Department you will help ensure the security and profitability of SouthStar through efficient, accurate and effective review and tracking of commercial accounts while maintaining a relationship with our clients throughout their contract.  Your typical day will consist of the following:

• Interact with clients and their customers through phone and email communication
• Enter data and information into Proprietary Software System
• Review of Client packages for funding
• Follow up on payment status of invoices with our Client’s Customers
• Review contracts and invoices for accuracy and completeness
• Analyze support documentation for accuracy to ensure policy is met
• Track invoices, post advances, interact with Clients to fund their working capital needs
• Perform entity searches, liens, judgments and tax filings and monthly monitoring
• Maintain updated and complete file documentation for audits
• Complete Monthly Reporting
• Assist in managing the portfolio, by requesting updated information for analysis
• Responsible for the overall maintenance on the Clients that your team reports to
• Perform general tasks and other related duties as required or assigned

We are looking for an individual with the following attributes:

• A smart, quick learning extrovert not afraid of challenges.
• A hard worker with the ability to have fun while working
• Proven ability to work in a fast-paced, results oriented team environment
• Self-Motivated problem solver with strong organizational skills and the ability to prioritize multiple tasks
• Must be comfortable with outside the box thinking, be resourceful and independently seek solutions
• Demonstrate self-initiative and follow through on requests and meeting deadlines
• Ability to accept and follow direction and a keen attention to detail is crucial
• Comfortable dealing with Executive Management and Clients
• Excellent verbal and written communication
• Demonstrated proficiency with Microsoft Outlook, Excel, Word and computer knowledge

The ideal candidate will be a team player that possess the attributes and skills noted above to be an active part of our growing company and have at a minimum a Bachelor’s Degree.
Full time position, salary commensurate with skills, experience and attributes.  Relocation packages are available.  Please submit your resume for review to careers@southstarcapital.com.

An often overlooked issue confronting young companies is that of having sufficient working capital.  The entrepreneurs who start up these companies pour their hearts, souls, and often, life savings into getting the enterprise off the ground.  They are successful at finding just the right product or service to fit a need and the business begins to take off.  Growth, however, is not always self-sustaining.  Many times orders will overrun the capital needed to fulfill them.  In these scenarios, the entrepreneur has to make some serious financial decisions that will affect the long term success of the company and the value that the owner will realize from his efforts.

One solution is for the owner to approach other investors.  With this option, investors would be given a portion of the company for the capital that they contribute.  The entrepreneur has to weigh the advantages of giving up a piece of the business that he/she has worked so hard to develop.  Additionally, the process of “selling” that percentage to investors takes a significant amount of time and an even greater amount of energy.  This process alone could impact the ultimate success of the company.  Often, there are negotiations that drag on while bills need to be paid and orders need to be filled.

A second solution for the owner would be to seek out traditional bank financing.  While this option may not include giving up a portion of the company to obtain the needed capital, it, too, is time consuming.  Banks usually require a multitude of financial documents, verification of assets and revenue, and, most difficult to these young companies, a long period of operating history.  They then take all of that information and send it off to a “committee” to make the decision.  That committee may only meet once a month, which is not in the company’s best interests.  The variety of hoops that traditional banks require the owner to leap through can take months to accomplish with no guarantee that financing waits at the end of the process.

SouthStar Capital provides a much better solution for these hard working entrepreneurs.  We understand the need for working capital and how critical the time element can be.  We don’t require that you have been in business for some arbitrary period of time, we don’t ask for financial documents that take months to secure, and we don’t pass off the decision to some faceless committee.  Our evaluation process can take as little as a few days.  We focus on the elements of your business that are producing the revenue and look to fund that stream.  As business owners ourselves, we recognize that making sure orders and accounts receivables are able to be filled is critical.  Buying parts, equipment, or paying your employees to complete those orders is time sensitive.   We want to be a partner in your success without asking you to give up a portion of your business.

If you are a young, early stage growth company in need of working capital, give us a call to see how we may be a better solution.

I started out in the insurance industry but please do not hold that against me. I think that the insurance industry gets a really bad reputation for being snake oil salesman. I think that also goes for real-estate agents and other over populated fields that people do not require training to get into. The industry however is still full of extremely professional people that have a desire to make money by providing protection to other people. I think that also goes for most industries.  One thing I learned was that even though most of my production time was spent in front of my computer, I still needed in person relationships. One of my business mentors pushed that in order to build my business I had to build relationships and threw me in front of some people. They looked at me as though as had something helpful to say, so I had no choice but to open my mouth and communicate. It was the beginning of a professional relationship with clients.

While understanding the power of web presence, I have to admit that networking or relationship marketing is just as commanding. There is nothing more promising than to have a person we trust recommending a company’s products or services based on their personal experience. If it’s your small business there is a lot more you can do to help build that trust, by establishing good will and credibility.

If you feel uncomfortable about meeting in person as I did in the beginning, prepare for the meeting by having a list of questions ready to ask about their business. Showing genuine interest in the other person, giving them a better impression as opposed to talking about yourself the entire visit. I think that questions go a long way to creating a better understanding of what a referral partner can bring to the table. Plus the better I understand your business the greater effect I will have on the people I refer to you.

Don’t hesitate to keep in touch with your new SouthStar Capital Account Executive by sending an email with an interesting piece of information. If you have a client referral give us as much information as you can on the client. This way when we write hand written thank you notes for something they did, it will be well-received. If the person gave you an excellent referral that turned into a sale, sending them a personalized gift is appropriate. It demonstrates your appreciation. Keep your relationship fresh with a phone call when you know it won’t be a disruption. Whenever possible, return the favor by referring potential clients to them.

You have likely heard the stories of some of the biggest business deals being done on the golf course. Remember the adage that “people do business with people they know, like and trust.” If a business owner sees that you are consistently trying to promote them your credibility grows stronger. Whenever you learn of an opportunity that could help your associate, be sure to extend them an invitation. Introduce them to other business people to increase their visibility.

I am involved in a number of service organizations in my community and I make a point to invite new small and medium business owners to make presentations. Social media networks such as Facebook is another way to promote your business associates but I always carry a few business cards from several other companies to give to people I meet that might require those services. Facebook and LinkedIn cannot accomplish that for you. My attitude is that when we have the willingness to help others do well with their business finances, we all succeed.

In closing if there is any way that SouthStar Capital can help you to grow your business please do not hesitate to give us a call or send an email at 843-277-6449 or info@southstarcapital.com. Feel free to check out our website anytime for more information about our people and our products. Until I speak to you again I wish you great success and always remember that information+application=transformation.

Finding capital is one of the hardest things small and medium size business entrepreneurs have to do. Since 2008, when the biggest of the big banks brought our economy to its knees, the smallest of the small-business community is still strapped for cash — despite the fact that larger small businesses, medium-sized businesses and larger business are having an easier time as restrictions ease up, according to the Federal Reserve and the National Small Business Administration.

Small to Medium size businesses today are forced to grow on credit. Unfortunately, not only is credit hard to come by but many business owners have been hit so hard by the last five years of tight money, they might not even really be “credit-worthy” — or should we say as credit-worthy as they might have been just a few years ago. Plus it is so hard for start up businesses to even establish credit within the first three years in operation.

Last month, Pepperdine University published its Private Capital Index for the Third quarter of 2013. The big news in the report is the difference between where these entrepreneurs are looking for money and where they are finding it. It’s not really a surprise, but here is where they are looking:

• 59 percent are looking at the bank

• 57.2 percent turn to business credit cards

• 49.9 percent access their personal credit cards

• 48.4 percent sought out a personal loan

• 44.2 percent went to friends and family

Most of the business owners visit the big national banks. After all, that’s where they have their checking account, maybe a credit card, why wouldn’t they go to the national bank? Unfortunately, they don’t leave the bank with a loan — as many as 90 percent of them leave without a loan. So where are they finding the money they need?

• 71 percent found success with friends and family

• 58 percent with their personal credit cards

• 57 percent used trade credit

• 54 percent used business credit cards

• 27 percent found success at the bank

Although 27 percent is a little better than the 10 percent I suggested, that still means that most business owners are going to leave the bank empty-handed. Not a ringing endorsement when you consider the TV and radio ads we hear every day claiming this bank or that bank is the “small business” bank.

The next option most business owners choose to take is going to the local bank or Credit Union. Having worked in the Credit Union for many years in the past I have seen several people walk out with no hope. Credit Unions however are getting the message that small businesses are a good investment for them. Often times Credit Unions will even partner with other Credit Unions to pull funds together for small commercial cases. Still most Credit Unions do not have a tolerance for lines of credit over $15,000.

Local Banks however are getting smarter. Many of them have started adding other services but all choices are still made based on a clean credit score and often will not grow with you. Since businesses have been funding their payroll and suppliers on extended credit and credit cards, those credit scores are looking rough. Plus having a fixed line amount limits your company on what jobs you can bid on.

What have been left out of these statistics are alternative banking options. When business owners get told no they run to family and friends. Even worse they put everything on a high interest credit card with huge compounding interest and accruing more debt. There is actually other steps you can take between begging family or going to the local loan shark. There is crowd sourcing using the web to sell off equity in your company to individuals. Then you can get advances on credit cards. Best of all you can try Asset Based Lenders.

SouthStar Capital is an Asset Based Lender in the Southeast United States. We will work with your company to create a working capital solution specific to your needs. We provide Accounts Receivable, Purchase Order, and Equipment Financing. We can help get you the cash flow you need to pay payroll. Money to bid on larger jobs and the equipment you need to grow your business. If you have questions about Asset Based Lending please give us a call at 1-800-763-3021 or check out our website.

Why is Invoice Factoring Better Than A Business Loan When you need money? There are a number of options out there but many will depend on the age of the company and their credit history.

This is a huge concern as according to The Service Corps of Retired Executives (SCORE), 82% of Start-ups and Small Businesses fail because owners have a poor understanding of Cash-Flow Management and lack the ability to access it at required levels to fund their growth!

One option that is available to them is invoice factoring, also referred to as, accounts receivable financing or invoice financing (with some differentiations). This type of financing mostly requires that a company has customers who typically pay within terms and have outstanding invoices. Below, we will take a look at why invoice factoring is better than a business loan and when a company might be best served using this type of financing.

• Doesn’t require taking on debt: Factoring does not require a company to take on additional debt. While it is often necessary for businesses to borrow money in order to get started and stay afloat, it is generally accepted that the less debt used, the better your Balance Sheet, Financials, Ratio’s and Investor Perception!  Having debt makes it harder to get loans in the future, debilitates an organization’s leverage and also puts a lot of pressure on companies to pay it back. Factoring allows companies to receive needed capital without the hassle and risk of using a loan.

• Money is received quickly: If a company needs money fast, there are few better options then invoice funding. In less than 7 days, a company can receive a large portion, up to 90% of their outstanding invoices. For companies with already established relationship with Southstar Capital this time can be shortened to around 24 hours. This makes it a perfect option when a company finds themselves needing a quick infusion of cash, needs to manage cash flow, or wants to ensure they are reporting the strongest financials they can.

• Simplistic, Fast Process: In order to receive a bank loan or a line of credit it is necessary to provide a number of proofs that you are a good credit risk. A company will need to provide all of their financial statements, have very good credit and have been in business for a good amount of time, generally more than 3 years. In contrast, a company looking into invoice financing, will not be approved based on this information. While a factor may want background information on the particular company they will be doing business with, the biggest concern will be the credit of the entity (debtor) that owes on the invoice. This takes a lot of pressure off the company in need of money and makes complete sense after all, no matter how good your organization may be, if your customers don’t pay you then you probably aren’t going to turn out very successful.

• YOUR COMPANY never has to pay back the money: Because the money given out is not a loan, it does not have to be paid back. As a result, there are no payments, principal and interest, to be made. The invoice is paid back by your debtor when they were planning to pay and receive no hassle about early payment, thus increasing customer satisfaction also!

• Outsourced collection duties: Not only will a Southstar Capital give the company a lump sum of money up-front, they will also handle collection duties for ALL invoices. For businesses without a collection department, this provides a much needed and valuable service. For companies with a receivables department, this provides a HUGE savings that mitigates or eliminates the cost of financing, as well as, eliminates the need to offer discounts for receiving payment sooner than credit terms agreed upon. Again, this savings lowers or eliminates the financing cost!