Working Capital. Every Business Needs It!

Working Capital. Every Business Needs It!

How long would your business last without enough money to cover expenses? Most businesses fail within the first three years due to lack of enough working capital, and even well established operations can experience cash crunches. Competitors are a constant. How financially strong your business is, will determine how well you can compete.

The frustration for many business owners is this – traditional lending sources either require you to be financially solid before they lend you money to grow or are conservative in the amount of credit they extend to the seasoned business operator.

So where do most business owners obtain the financing they need to grow their business? In short, asset based lenders. There is a 2nd tier of lenders below bank financing that finance purchase orders, equipment needs, inventory, real estate and accounts receivable. Essentially any asset listed on a given company’s balance sheet can be eligible for financing. Their focus is either on the quality of the asset they are financing or the financial strength of the customer placing the order (in the case of purchase order and accounts receivable financing). This approach makes financing growth much more obtainable for business owners.

What about financing for the established companies? A challenge remains here as well. Financing available for the established business owners is often inadequate to meet growth needs. Banks are most typically conservative and provide small lines of credit, even to companies with strong net worth and income. Companies need creative solutions when seeking additional capital and this creativity comes from the non-regulated, more entreprenuerial thinking, capital sources in the market. Could your business benefit from knowing a partner like this?

About Huntington Coast Capital.

Huntington Coast Capital secures funding for companies in a broad base of industries. Our clients come to us to find a more flexible lending partner to meet their growth needs. Many are declined by the bank and are in need of a more creative and entrepreneurial funding solution.

We consult on a wide range of funding options for business owners throughout the United States in the following areas:

  • Supply chain financing
  • Equipment loans and lease programs (learn more about our equipment loan platform offered through our subsidiary)
  • Lines of credit for working capital needs
  • Term loans for marketing, hiring staff and general expansion needs
  • Factoring services for accounts receivable financing that also provides for back office credit and collection functions
  • Purchase order financing
  • Asset based loans
  • Business acquisition financing
  • Inventory financing
  • Private commercial real estate bridge loans
  • SBA loans for business and real estate needs

Whether you are a startup or established, in need of $100,000 or $10,000,000 we have the capital partners to meet your needs. Contact us to see how we can assist in taking your business to the next level. To your success!

Huntington Coast Capital Presents At The Cove At UC Irvine Applied Innovation

Huntington Coast Capital Presents At The Cove At UC Irvine Applied Innovation

Huntington Beach, CA  Entrepreneurs from around the southwestern United States came to The Cove Applied Innovation Center at UC Irvine to pitch their business plans in an effort to raise capital from venture capitalists and equity investors. The companies in attendance ranged from pre-revenue, startup concepts to established companies looking to take their business to the next level. A broad range of industries were represented some of which were video game developers, niche apparel companies, foam mattress engineers, craft tea brewers, education service platforms, and airline sanitation concept companies. There were also medical technology companies represented in the area of liver function testing and patient records management.

The energy in the room was high with business owners given either 1-minute or 5-minutes to present their business and plans for the future and the opportunities that existed. The time frames were offered at different ticket price levels. The pressure was on from the beginning as the moderator kicked of the program by stating bluntly, if you can not explain your business and justification for investment in the first minute, the investors will not listen to what you have to say in the second minute! 

After the entrepreneurs were placed in the hot seat to present with hundreds of eyes fixated on them, the panelists were given the opportunity to ask questions about the business to dig deeper to see if an investment opportunity existed. Feedback was direct and pointed as the venture fund and equity groups inquired about the financial details and assessed the likelihood of earning a return on an investment. Investor comments were direct, cold and objective as they assessed the quality of the opportunities being presented.

Huntington Coast Capital was at the program to discuss the other side of business lending, asset based loans. Successfully securing an equity investment for your company is a gratifying feeling. It is an acknowledgement from discerning and critical investors that your business plans have merit and potential. Sometimes, this endorsement and confidence can be supported with investments of over a million dollars!

The harsh reality is however, that very few companies earn the privilege of an equity investment. These equity groups are reviewing upwards of three business investment opportunities per day. I often equate companies looking for an equity investment as sea turtles. Millions are born and sadly only a few hundred make it to open water!

This success ratio can be discouraging. However, when companies can not qualify for an equity investment, capital may be available on the debt side. If you are looking for money to hire staff, complete research and development of a product, market your company or gain inroads to supplier and customer contacts, equity is a great option. Conversely, if you are looking for funds to cover purchase orders or improve your working capital cycle, an asset based loan is a better option. You should not give up equity in your company if all you are looking to do is cover your cost of goods, purchase equipment or increase your inventory to meet demand. These capital expense items are all met with asset based loans.

Huntington Coast Capital specializes in securing asset based loans for companies of all sizes throughout the United States. Our typical funding amount is anywhere from $250,000 to $1,500,000. If you have solicited an equity investment with no success, look in to an asset based loan. We would welcome the opportunity to speak with you about your business goals. Call me directly at 714-719-8966.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.

What Is An Asset Based Loan?

What Is An Asset Based Loan?

Huntington Beach, CA: The term asset based loan is widely used to describe a loan secured against an asset of value as security for the money borrowed. Huntington Coast Capital has been securing asset based loans for our clients in California and across the nation since 2010. Asset based loans consist of loans secured by commercial real estate, inventory, accounts receivable, purchase orders or equipment. Below is a brief summary on how we have assisted our clients in securing asset based loans in California and across the United States in these different categories.

  1. Commercial and investment real estate. Companies that lack sufficient business collateral are often required to pledge outside collateral as an abundance of caution in this type of asset based loan. Often referred to as bridge loans, these loans usually have terms of 6 months to 3 years and are offered through private money capital providers. These asset based loans are offered in California and throughout the country.
  2. Inventory loans. For companies in the manufacturing, distribution, wholesale and retail spaces, inventory represents cash tied up in goods for sale. Inventory can be used as security in an asset based loan. Depending on the type of inventory however, a loan may not be available. For example, if a company is selling fresh fish, meat or poultry, finding an asset based loan will likely not be possible due to the quick turn of this type of product and the potential for spoilage. Other forms of inventory such as t-shirts, tires, dried goods and other products with long shelf lives have a much better chance of being accepted as collateral for an asset based loan.
  3. Accounts receivable and purchase orders. These two assets represent an amount owed and an order for shipment. Both of these asset types qualify for an asset based loan. In fact, these two asset classes are the most popular asset based loan being requested from our clients in California. Companies in search of improved working capital utilize their accounts receivable as collateral for an asset based loan and their purchase orders as collateral when looking to obtain funding to cover their cost of goods to suppliers.
  4. Equipment loans. Asset based loans used to purchase or refinance equipment are for a specific purpose. Retail sector companies such as restaurants are big users of equipment loans as well as companies in the manufacturing sector. Often times in business acquisitions, equipment loans provide a portion of the funds required for the purchase if the equipment is currently owed free and clear and has a usable life of over 10 years.

Asset based loans are vital to the economy and provide funds to companies when more traditional finance programs can not meet the need. If you are a California company in search of an asset based loan or are located anywhere in the continental United States and looking for financing to take advantage of growth opportunities, consider an asset based loan.

Need assistance navigating the capital markets? That is our specialty and we are eager to help. For advise and counsel on asset based loans or any other form of business financing, give us a call 714-719-8966.

To your success!

Patrick Zazueta
Huntington Coast Capital, Inc.

Why Do Most Business Owners Struggle To Get Bank Financing?

Why Do Most Business Owners Struggle To Get Bank Financing?

Disappointed Business Owner

Huntington Beach, CA: According to Bloomberg, 80 percent of small businesses fail within the first 18 months. Some fail because their products do not fit current market needs, others because they do not adequately differentiate themselves from established competitors, and others because they do not effectively communicate value propositions to consumers. Of course, startups would in many cases be able to fix those problems, if only they had time.

The Increasing Difficulty of Securing Funding

Although business owners have access to a wider variety of financing options than ever before, finding capital is becoming increasingly difficult. Referencing a survey of small business owners–The Small Business American Dream Gap Report–Levi King (CEO of Nav), writes in Entrepreneur:

“Within the previous year, the survey revealed, 20 percent of the small businesses surveyed said they had considered shutting down, primarily because of lack of growth or cash-flow issues.”

Why Businesses Have Difficulty Obtaining Bank Loans

Banks fail to approve small business loans for a variety of reasons, including the following:

  • Poor credit history: the personal credit threshold for many business loan products is around 660; banks typically have a higher score threshold of around 720. Traditional banks and some privately-owned finance companies have a preliminary scoring system based on running a credit check on the individual’s credit first. This is the first hurdle in getting approved for a loan. Poor personal credit most often stops the review process before any real underwriting has taken place on the business.
  • Time in business: the magic number for time in business is 2 years. Why is this? Because most businesses fail within this time period. Not only is time in business important, but also profitability. It is not good enough to simply be in business for two years. Banks look to see at least two consecutive years of profitability on the business tax returns. Business tax returns are the most conservative numbers for the business (because of the natural tendency to keep profits down to avoid paying taxes), and thus, are the numbers used when applying for a bank loan.
  • Historical Debt Coverage: banks frequently fail to approve loans because business owners do not have the necessary debt service coverage for the loan when they apply. Banks look back in time when determining whether or not the business can afford the debt. This in contrast to looking at projections and possible increase in profitability as a result of using the funds provided from the loan to grow the business.

Are There Any Financing Options Other Than Banks?

Fortunately, there are forward-leaning companies that help businesses secure financing. These groups are private funding companies providing asset based loans and working capital products with fewer restrictions and qualification hurdles to jump through. These companies are the cavalry to the rescue for many business owners. Without the second tier, private money programs in the marketplace, many more business owners would have to close up shop. Connecting business owners with this second tier market is what Huntington Coast Capital was formed to do. We are on the side of business owners and help them navigate the secondary markets when the banks say, NO!

Conclusion

Companies like Huntington Coast Capital succeed for 3 principal reasons:

  • We are unbiased in providing business loan options and comparisons;
  • We serve a broad range of industries; and
  • We specialize in securing loans for businesses that have been turned down by the bank.

If you’ve been turned down for a bank loan and want to learn more about our innovative financing options, contact us today.

Sources:

Entrepreneur: Five Reasons 8 Out Of 10 Businesses Fail

Entrepreneur: The Real Reason Banks Deny Loans to Many Small-Business Owners

Nav: Nav’s Small Business American Dream Gap Report Reveals Surprising Reason Many Loan Applicants Get Denied

Business News Daily: 6 Factors That Keep You from Getting a Small Business Loan

Huntington Coast Capital: Why Us?

How Will A Rise In Interest Rates Effect Business Owners?

How Will A Rise In Interest Rates Effect Business Owners?

Things That Traditionally Increase When the Fed Increases Interest Rates

The recent rise in the Fed funds rate will likely cause a ripple effect on the borrowing costs for consumers and businesses that want to access credit based on the U.S. dollar. That has an impact across numerous credit categories, including the following:

  • The Prime Rate: A hike in the Feds rate immediately fueled a jump in the prime rate, which represents the credit rate that banks extend to their most credit-worthy customers. This rate is the one on which other forms of consumer credit are based, as a higher prime rate means that banks will increase fixed, and variable-rate borrowing costs when assessing risk on less credit-worthy companies and consumers.
  • Credit Card Rates: Working off the prime rate, banks will determine how credit-worthy other individuals are based on their risk profile. Rates will be affected for credit cards and other loans as both require extensive risk-profiling of consumers seeking credit to make purchases. Short-term borrowing will have higher rates than those considered long-term.
  • Savings: Money market and credit-deposit (CD) rates increase due to the tick up of the prime rate. In theory, that should boost savings among consumers and businesses as they can generate a higher return on their savings. However, it is possible that anyone with a debt burden would seek to pay off their financial obligations to offset higher variable rates tied to credit cards, home loans, or other debt instruments.
  • U.S. National Debt: A hike in interest rates boosts the borrowing costs for the U.S. government and fuel an increase in the national debt. A report from 2015 by the Congressional Budget Office and Dean Baker, a director at the Center for Economic and Policy Research in Washington, estimates that the U.S. government may end up paying $2.9 trillion more over the next decade due to increases in the interest rate, than it would have if the rates had stayed near zero.

Things That Are Largely Unaffected When the Fed Increases Benchmark Interest Rates

  • Auto Loan Rates: Auto companies have benefited immensely from the Fed’s zero-interest-rate policy, but rising benchmark rates will have an incremental impact. Surprisingly, auto loans have not shifted much since the Federal Reserve’s announcement because they are long-term loans.
  • Mortgage Rates: A sign of a rate hike can send home borrowers rushing to close on a deal for a fixed loan rate on a new home. However, mortgage rates traditionally fluctuate more in tandem with the yield of domestic 10-year Treasury notes, which are largely affected by inflation rates.

Things That Traditionally Decrease When the Fed Increases Interest Rates

  • Business Profits: When interest rates rise, that’s typically good news for the profitability of the banking sector, as noted by investment giant Goldman Sachs. But for the rest of the global business sector, a rate hike carves into profitability. That’s because the cost of capital required to expand goes higher. That could be terrible news for a market that is currently in an earnings recession.
  • Home Sales: Higher interest rates and higher inflation typically cool demand in the housing sector. On a 30-year loan at 4.0%, home buyers can currently anticipate at least 60% in interest payments over the duration of their investment. Any uptick is surely a deterrent to acquiring the long-term investment former President George Bush once described as central to “The American Dream.”
  • Consumer Spending: A rise in borrowing costs traditionally weighs on consumer spending. Both higher credit card rates and higher savings rates due to better bank rates provide fuel a downturn in consumer impulse purchasing. (For more, read How Interest Rates Affect Spending.)

HCC Funds $1,300,000 In Business Loans In The Month Of December

HCC Funds $1,300,000 In Business Loans In The Month Of December

Huntington Beach, CA.  During the month of December Huntington Coast Capital secured a $650,000 equipment loan and two SBA loans for $500,000 and $150,000 for a total of $1,300,000 in business loans! The scenarios are outlined below:

  1. $650,000 equipment loan for a southern California contractor – The company was paying a high rate of interest on the equipment they used in their day to day operations – The high cost of financing was impacting their cash flow. They engaged Huntington Coast Capital for their equipment loan needs and we were able to reduce their financing costs by almost half, saving them thousands in monthly finance expense.
  2. $500,000 SBA loan for a growing company in the stencil business – The company produces custom stencils for any design and application. The company had an existing SBA loan and were looking to borrow an additional $350,000 to purchase additional equipment to meet growth demands. Huntington Coast Capital secured a $500,000 SBA loan to cover the equipment costs and refinance the existing SBA loan.
  3. $150,000 SBA Express Loan for a custom glass manufacturer – An established custom glass manufacturer was looking for additional funds for advertising and marketing to break in to new markets and broaden their customer base. They have a profitable business serving general contractors and are looking to expand in to direct commercial work.

Whether your business loan needs are for equipment purchases, inventory or general working capital demands, we can assist. We serve companies of all sizes from startup to established.

Equipment financing, inventory financing, and working capital loans are easy to find right? Not if you’re in one of these two scenarios…

Equipment financing, inventory financing, and working capital loans are easy to find right? Not if you’re in one of these two scenarios…

Huntington Beach, CA: Business owners looking to obtain a business loan for equipment financing, inventory financing or working capital have many options to choose from. Capital is plentiful for companies on the rise and in need of financing to meet their growth potential. In fact, most of our clients come to us with equipment financing, purchase order financing, inventory financing, and working capital loan needs. Huntington Coast Capital has a extremely high success ratio in placing these loan requests.

However, there are a couple of situations where this may not be so easy. On a rare occasion we will get a funding request for a company in the medicinal marijuana industry. While the selling of marijuana is legal in some states, there is still a stigma attached to it, even if it is legitimately prescribed by a doctor. As you can imagine, obtaining funding for the growers and distributors in this industry, even if completely legitimate, is very difficult to secure. Some lenders simply do not lend in this industry and lump it together with other unsavory industries like gambling and adult content distribution. Is this fair? I have no idea. This article isn’t about providing an opinion on what the lender’s moral compass should be when analyzing loan requests in this industry. I can say, however, that finding a lender to fund your expansion in this business is very difficult. In fact, even with our extensive contacts in the industry, we only know of one. That’s right one. However, we were happy to have this contact when we received a call from a company in Colorado inquiring about an equipment loan along with funding for tenant improvements for his budding (no pun intended) business. The fact is that his cash flow and profit margins are extremely strong and his business could grow substantially with the right capital partner. Looks like we found them a solution after months of searching on their own in vain. A satisfying moment for us indeed. Now his Cannabis business is set to catapult to the next level!

The second difficult spot to be in is when you are looking for accounts receivable financing for consumer accounts receivable. The market is flooded with options for financing accounts receivable when you are selling business to business, but business to consumer is a ghost town. Most all lenders have the perspective that financing against these debt pools is risky and the credit process for business credit and personal credit is much more subjective and difficult to manage. I have to say, that I agree. To manage risk in this area requires having a specialty and sole dedication to the industry. Like other types of lending, you need to manage losses through diversifying the risk over several separate exposures and minimize credit to any one debt holder. However, this said, it is possible, just not popular among the lending community. As before, we have only one lender in this industry! We don’t come across these requests too often, but when we do, it is satisfying to say, “we may have a solution.”

Do you have a difficult loan request? Has everyone told you “no” because you fit one of the scenarios above? If so, we would like to speak with you!

Be on the lookout for our next blog article that features auto mechanics and why that experience also requires a knowledge of the options! I think we can all agree that we are paying too much for our cars to be serviced in most cases and it pays to know who else can do it for less!

Contact us 714-719-8966

Huntington Coast Capital Is Off To Its Best Start Ever In 2016!

Huntington Coast Capital Is Off To Its Best Start Ever In 2016!

2016 has started out in a full sprint for Huntington Coast Capital. Through the first four weeks of the year, we have secured $11,300,175 dollars in working capital business loans for our clients. This volume represents the fastest start of any year since our first full year in operation in 2011!

The loan mix was varied and breaks down as follows:

* $5,500,000 business loan for a distributor of private label pastas, spices, and mixes secured by the company’s accounts receivable and inventory.

* $3,200,000 construction loan for a ground up development project in San Diego, CA.

* $100,000 SBA loan for a product development firm.

* $500,000 business loan for a auto transportation company.

* $2,000,0000 business loan for an importer of suits and formal wear for men.

Huntington Coast Capital is pleased to have secured funding for these clients! In each case, the client was in need of a creative business loan to grow their business. The business loan options we brought to the table allowed them to realize the full potential of their company.

If your company could benefit from having a choice of business loan options to choose from, we would like to speak with you! We enjoy playing a small role in insuring that our clients succeed.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.
714-719-8966

HCC Secures $570,000 Loan For An Electronics Distributor

HCC Secures $570,000 Loan For An Electronics Distributor

In a first of two capital placements, Huntington Coast Capital secured a $570,000 SBA 7A loan for a electronics distributor in Chicago, IL.

The company was in dire need of additional capital to meet it’s growing demand. They needed capital to purchase the inventory they then sold on their online platform. Because the company sold at point of sale through the website, they were not a fit for traditional accounts receivable financing.

The company specializes in refurbished tablet computers – mainly iPad and Samsung units. In this business, it is necessary to have the inventory on hand to be able to fulfill customer orders in a timely manner. The newly acquired line of credit will allow them to do just that.

As a second step, HCC is now working with them on a supply chain funding facility for an additional $500,000 to work in conjunction with the existing financing. With a total purchasing power of $1,000,000, the company would be able to grow exponentially.

If your business could benefit from additional capital, we would like to speak with you.

To your success!

Patrick Zazueta | Founder
Huntington Coast Capital, Inc.
714-719-8966

HCC Secures $750,000 Factoring Facility For A Coffee Importer

HCC Secures $750,000 Factoring Facility For A Coffee Importer

Huntington Coast Capital secured a $750,000 factoring facility for a coffee bean importer! The company was outgrowing its current lenders capacity quickly and needed a solution to meet the growth needs going forward.

The coffee, mainly beans imported from El Salvador, was experiencing huge demand from their existing and new customers. They needed a capital partner that could provide Letters of Credit and assist in speeding up their working capital cycle once the goods had been shipped to their customers.

Huntington Coast Capital moved quickly to find them the right solution to guarantee they had the funds they needed to take the business to the next level. We saved our client time, money and frustration during the process of finding a new lender.

Could your business benefit from additional capital? Call us! 844-239-2632. Unbiased Consultation. Proven Results.