Friday, April 12, 2013

Are You Sticking With Expensive Financing Too Long?

I am currently involved in two loan transactions where the small-business owner stands to save substantial money by changing lenders. In both instances, these are relatively young companies that have been working with expensive private money lenders and factors, and their companies have grown to the point where they can now work with the asset-based lending departments at Federal Deposit Insurance Corporation-insured banks.
In fact, both of these transactions are taking advantage of the Small Business Administration’s recently revamped CAPLines program, which is designed to help companies with working capital.
In one on the financings, if the small-business owner chooses to proceed, his finance costs will fall by 75 percent, and his liquidity will increase by 50 percent. In the other transaction, the small-business owner can expect his cost of capital to fall by 50 percent this year.
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