Your Business May Be at Risk of Growing to Death

Business Grow to Death
business growing

Growth is usually viewed as a positive step for business owners, but if not managed properly, growth could be the death of your business.

If your business grows too fast, or grows the wrong way, you can actually grow yourself out of business. Along with growth comes the costs of additional staff, system development, and changes in operations. Without access to working capital, your business won’t be able to support these essential changes.

By tapping into your business’s Accounts Receivable, or outstanding invoices, you can free up existing capital and have access to the immediate cash flow needed for growth. Other assets, such as equipment, inventory, or purchase orders, can be used as collateral to advance capital to your business as well. Both of these options have a fast and easy qualification process that allow for initial funding in just 2-3 days. Unlike traditional lenders, we will not turn you down based on amount of years in business or your credit history. Plus, after initial funding, working capital will arrive in your bank account within just 24 hours of submitting an invoice.

If your business is growing faster than your capital can keep up, don't let it grow to death! Treat yourself today and learn more about your working capital options.

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How You Can Be a ‘Shark Tank’ Winner

Shark Tank
Shark Tank

Getting the chance to be on the reality show ‘Shark Tank’ can be a huge opportunity for any business. Having a great idea and company can only get you so far if you lack the working capital to grow.

What if we told you that SouthStar Capital can provide the same benefits as the show ‘Shark Tank’, but our version is even better? We can provide your business with the capital needed for growth, but we do not require any equity within your company. Instead, we use the existing assets you already own and turn them into working capital. In-turn, you keep 100% ownership of your company and have unlimited access to working capital.

SO...

  • If your business needs working capital for start-up or growth
  • If you dream about how much your business would benefit from being on the show ‘Shark Tank’

Collateral

Collateral

You may have collateral and not even realize it…

Collateral

When looking for a source of capital, there are several factors your lender may take into consideration. For instance, traditional lenders will first look at your company’s credit history, balance sheet strength, and years in business when underwriting a loan. This way of thinking leads to many businesses being turned down and not receiving the funding they need.

SouthStar Capital takes a non-traditional approach and uses your business’s assets, or collateral, to make our funding decision. In-turn we are able advance your business capital by using your collateral as leverage.

Accounts Receivable

Any outstanding invoices or money owed to your company by your customer.

Equipment

Equipment your company owns, such as machinery, trucks, and specialty equipment.

Inventory

This includes both Work In Progress (WIP) and Finished Goods, each evaluated differently.

Purchase Orders

An order you obtained from a quality company that has agreed to accept your product or service.

Real Estate

Property consisting of land or buildings that is owned by you or your company.

Intellectual Property

Refers to creations of the mind and includes such things as patents, formulas, and inventions.

Stock

This includes both traded and privately held stock, each being evaluated differently.

Letters of Credit

A letter issued by a bank guaranteeing that your customer is able to pay for your goods or services.

Certificates of Deposit

A savings certificate issued to you, by the bank, with a fixed interest rate and maturity date.

Rolling Stock

Both powered and non-powered wheeled vehicles used by your business on the railway or roadway.

Contact us today to learn more about the collateral you may have and your funding options with SouthStar Capital.

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How does an Asset Based Line of Credit Work?

how does asset based line of credit work


Asset Based Lines of Credit allow you to borrow a percentage of your Accounts Receivable, Equipment, and Inventory. All or one of these assets may be utilized in an Asset Based Line of Credit. Find out below how your current assets can assist your company in obtaining the capital it needs.

Asset-Based Line of Credit with Accounts Receivable Financing:

  1. Your company provides a product or service to your customer.
  2. You provide SouthStar with an aged accounts receivable and payable summary.
  3. SouthStar will set up an open line of credit up to 85% of the qualifying outstanding receivables.
  4. Your customer submits payment made out to your company to SouthStar’s lockbox.
  5. SouthStar will collect the payments from the lockbox.
  6. We will then apply the collected amounts toward the outstanding balance on your line of credit.

 

Asset-Based Line of Credit with Equipment:

  1. You have a piece of machinery or equipment with some equity.
  2. You get a professional appraisal done on the equipment to establish a value.
  3. The equipment is underwritten to determine the ability to liquidate if it becomes necessary.
  4. Once approved, SouthStar will set up an open line of credit up to 70% of the value of the assets (taking into account any existing liens on the equipment).
  5. As you pay down the line, you free up additional cash to use at your discretion.

 

Asset-Based Line of Credit with Inventory:

  1. The value of the inventory on hand is established either from your current balance sheet, third-party verification, or a combination of the two.
  2. Once the value is established, SouthStar will underwrite the inventory based on the ability to liquidate, if it becomes necessary.
  3. Once approved, SouthStar will set up an open line of credit up to 50% of the value of the inventory.
  4. As you pay down the line, you free up additional cash to use at your discretion.

 

Learn more about how an Asset-Based Line of Credit can benefit your business!

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Asset Based Lending vs Bank Financing

Asset Based Lending

Asset-based lines of credit refer to loans secured by a wide variety of assets such as accounts receivable, equipment, and inventory. Asset-based lenders rely on the value of the underlying collateral to minimize the loan’s credit risk. Asset-based lenders are sometimes referred to as Secured Lenders.

The primary difference between asset-based lending and traditional bank lending is what the lender looks to when underwriting a loan. A traditional lender will look first to the cash flow then to collateral. An asset-based lender looks to collateral first. Since traditional lenders underwrite cash flow as their primary repayment source, they typically require less collateral controls and monitoring, but more financial covenants.

For asset rich companies, an asset-based loan may make more funds available because it is not based strictly on future cash flow predictions. Additionally, the structure often requires fewer covenants, providing more flexibility for many borrowers.

Many companies actually prefer asset-based lines of credit to bank financing, even if they can qualify for a bank loan. Here are a few reasons why:

  • Asset-based lines do not require an annual clean up of your account. In other words, unlike banks which generally require you to have a zero balance at least once every 12 months, our lines are open for you to use every day without worrying about zeroing out your balance.
  • Asset-based lines require much less collateral than a bank will ask for. Asset-based lending advance percentages are much higher than the bank offers, meaning you do not have to put up as much collateral to obtain the same amount of money.
  • Asset-based lines are not subject to routine bank regulatory reviews. We do not have a board of directors that reviews your line each month or quarter and determines that you no longer fit the lending parameters.
  • Asset-based lenders are not as concerned with personal credit histories or credit scores like a bank. Our lines are based on the collateral we connect to the transaction, not the credit score or history of the principals.
  • Asset-based lines allow you to manage your cash flow how you want. You only pay for the amount you use, unlike many bank loans where you receive a lump sum at closing and make a fixed payment every month based on the original loan amount.

Contact SouthStar Capital to learn more about Asset Based Lending and the options available to your company.

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Is an Asset Based Line of Credit Right for You?

Asset Based Line of Credit
Asset Based Lending

At SouthStar Capital, we are dedicated to structuring a financing package that benefits your company today and in the future. SouthStar can tailor fit a financing solution involving an Asset-Based Line of Credit, along with many of our other products.

In thinking about whether an Asset-Based Line of Credit is the right solution for obtaining working capital for your business, ask yourself the following questions:

  • Is your business in growth mode?
  • Will your bank not increase your current line of credit therefore not allowing your company to grow?
  • Do you need additional working capital beyond what you currently have at your disposal?
  • Have you been in business three or more years?
  • Do you have Accounts Receivable, Equipment, and Inventory that could be used as collateral?
  • Is your bank currently willing to take a write down on a loan?
  • Have you been turned down by a bank or government backed lending organization for financing?
  • Do you have a strong balance sheet with unencumbered assets?
  • Would you like a line of credit that you could draw on at your convenience?
  • Do you have assets you would like to leverage to meet your immediate finance needs?
  • Do you want a line of credit that is flexible and able to meet your demands and allow your business to grow?
  • Do you have marginal profitability or are coming out of a recent losses?

If the answer to one or more of the above questions is YES and your business has accounts receivable or equity in your equipment or inventory, then you are a candidate for an Asset Based Line of Credit.

Click to learn more and see how working with SouthStar can benefit your business both today and in the future.

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Keep your Company’s Cash Flowing through a Seasonal Slump

Seasonal Slump Business
Seasonal Business

If you are a business owner, it is very likely that your business has experienced a sales slump at some point in its lifetime. Some of these slumps may even be seasonal and have a predictable “slow” time of year. The good news is that maxing out credit cards or taking out a second mortgage doesn’t have to be the answer to getting through the downswing.

By using the assets your company already possesses, you are able to create working capital for your business to thrive and grow. SouthStar Capital offers the alternative financing solution of Asset Based Lending.

Where SouthStar Can Step-In

Asset Based Lending can create working capital using your business’s assets from accounts receivable, equipment and inventory. SouthStar will help you get the funding you need in just 2-5 days, so you can solve your immediate cash flow needs. Asset Based Lending provides a revolving line of credit, so you have access to as little or as much capital as soon as you need. The funds are sent directly to your bank account, allowing you to have control over exactly what the capital is used for.

One Less Thing to Worry About

Being worried about your company’s cash flow is already stressful enough, without having to worry about qualifying for funding. SouthStar has an easy application process that is not based on your credit score. Since we will be funding based on your business’s assets, we are less concerned with your personal credit, or the strength of your balance sheet.

Over the Slump, Now What?

Asset Based Lending is a great way to use your assets to your advantage, especially during seasonal slumps or downswings. But what about when you’re back into busy season? Even while having sufficient working capital, Asset Based Lending can help take your company’s growth to the next level. By using your assets to create cash flow, you are able to take the contract you would of had to turn down, hire the new employee you really need, or increase your marketing budget to grow your brand. These are just a few of the opportunities your company could achieve by adopting the process of Asset Based Lending.

Contact us to learn more about the benefits of Asset Based Lending with SouthStar Capital!

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10 ways to build strong referral relationships between you and SouthStar Capital

Referral Relationship

SouthStar Capital prides itself on the relationships it has created over the years with referral partners. We have noticed that there are often two types of relationships that evolve. The first is someone that occasionally sends a client here and there to us as a trusted resource and those that make SouthStar Capital a part of their company resources. My question is which do you want to be?

To be an effective networker, you should constantly be strengthening your relationships with referral sources. The best way to go about this, of course, depends on each individual referral source and what he or she responds to.

So while there isn’t one “best” way to solidify your connection with your client, you can take a number of actions to build good will and credibility in those relationships. Here, I offer my top 10 examples that should give you some ideas of how to use SouthStar Capital and get you off on the right foot solidifying loyal clients. This list isn’t exhaustive, so please feel free to add your own actions to it.

1. Arrange a one-to-one meeting. Setting up a meeting between your team and clients with SouthStar Capital goes a long way to strengthening the clients understanding and expectations of what we can provide. Meeting a referral source in person is an excellent opportunity to learn more about his or her business and interests. Plus you get to see in person examples of how we can help your clients first hand. Not to mention that you can set up this meeting in your office which solidifies the relationship between you and your client making them appreciate the help you are giving them. If you prepare questions in advance so that the conversation flows smoothly, you will also see better results. Be ready to give an update on your business and to ask lots of questions about your client’s interests.

After we’ve met at least once, you may also consider inviting your clients to participate in some type of recreational activity, such as a golf outing, fishing trip, tailgating, or happy hour. This can be a good opportunity to let your client see a different side of you in an informal setting. This reassures them that you have their best interest at heart. Making them even more dependent on your for your business even though you are introducing them to ours. Take banking referral partners for instance. Setting up this type of arrangement gives your client a means to grow their business outside of your ability and keeps their checking accounts, credit cards, savings, and investments all with you. We are only providing the working capital for them to grow their business to a level that will eventually meet your criteria. In return, they can turn a rejection into a strong client with more opportunities down the line.

2. Send a thank-you card. At SouthStar Capital we pride ourselves with handwritten thank-you cards to our clients. This makes a great impression, especially in this age of electronic communication. In that card we can also mention you and your company by name again reaffirming your relationship. If you write a personalized note that mentions what you’re thanking your referral source for then again both relationships are strengthened and a team mentality begins. Often this results in great referrals from your clients back to you of other business owners that could use your help. If you’d rather send something online, SendOutCards.com is a useful resource.

3. Send a gift. Like a thank-you card, a gift — however small or inexpensive — can help build visibility and credibility with your clients. We can work together and send each other’s marketing materials and give away in the same package. Try to find out what his or her likes are (such as favorite foods, hobbies, etc.), and send a gift that is personalized.

4. Call a referral source. An occasional, casual phone call is a good way to keep our relationship strong — when you take care to call or respond to our calls we can better understand what types of clients you are looking for. Perhaps you are a part time CFO. You may want to focus on recycling companies and companies with strong equipment needs. By having conversations on a regular base with our team we can better understand what a good client for you looks like. In turn helping you to establish more clients as well as, helping us get someone that knows our process and how we work in the office. It’s also a good idea to have a piece of news or some tidbit of information to pass along that will benefit or interest your clients. It helps in the closing process and shaping our funding solutions around their needs and desires.

I personally love to add hobbies that the client loves or information about their families. This way you know more information about them and trigger points that will help you break down some of the walls that they may have up. For example I had a client the other day that loved Steelers Football. Letting you know that helps you have a topic of discussion to help break the ice.

5. Display a source’s brochure. Doing a bit of sales work on behalf of our referral sources can not only enhance your relationship with the client but also advertise to other clients a resource they needed. If you have a public area for your business, offer to place our materials where your clients can read them.

6. Extend an invitation.  SouthStar Account Executives are always out networking. We would love to invite you to our sources of networking and other networking events. We can even work an event with you, introducing people we run into to other businesspeople you know creates an opportunity to meet others in your target market. It may also provide new business opportunities for us both. Of course it also helps us strengthen our relationship and understanding of each others products and services.

7. Nominate them for an award. Watch for these types of opportunities. Local service and civic organizations often present annual awards recognizing contributions to a particular cause, and local periodicals often sponsor awards contests for businesspeople. Find out which groups and interests your referral source is involved in and check to see if there is a form of recognition associated with them. Then we can nominate each other creating more resources for establishing each other as experts in our fields.

8. Include a source in your newsletter. Even a brief mention of SouthStar Capital in your newsletter can pay dividends down the road, including the opportunity for us to reciprocate the favor in our own newsletter.

9. Arrange a speaking engagement. Let us help each other get in front of a group that would be interested in our business or area of expertise. Local chapters of service organizations, such as Rotary and Kiwanis, are always looking for good speakers. If you belong to a group that invites people to speak, use your contacts to help your source make the rounds among various chapters.

10. Turn the table. Let help each other find other referral sources we might find useful. It’s often a wonderful way to build your relationship. By us helping to build each other’s centers of influence we are increasing our business, and helping to create a debt of gratitude that will encourage these referral sources to send us back even more referrals.

Have you had success incorporating other techniques that aren’t listed here? If so, I’d love for you to share them with us. My email address is april@southstarcapital.com and I look forward to hearing from you.