Whatever your stage of growth, MyCFO can assist in securing financing!
Cash flow is the financial lifeblood of any business. Whether for rapid growth or other reasons, your day-to-day payroll, overhead and A/P requirements can quickly outstrip internal financing capabilities. Here are some real-world examples of how MyCFO assists clients with obtaining cash flow financing:
Example: Start-up company
Cash flow financing is one of the most challenging elements for start-ups. Each business faces a different scenario but the common thread is lack of a profit track record (i.e., banks generally require two years of profitability before considering revolving lines of credit). This requires creative thinking in order to move forward. In this example, our client’s business plan included purchasing equipment and obtaining a line of credit. Instead, MyCFO switched their thinking and worked with a local bank to obtain equipment financing (which was accomplished with continuing guarantees from the owners, who had good credit). Their savings that had been set aside for equipment purchases were then utilized to support cash flow. It should be noted that the same scenario would have applied with other fixed assets, such as purchasing a facility/building.
Example: Mature company needing first-time bank financing
It is common for a company to operate for years without requiring external financing, then events occur which necessitate such funding. In this example, our client decided to take advantage of new market opportunities, which entailed bigger space and more vehicles. The company had a 20-year history of success — but their conservative bank said “no” to the financing request due to a minimal credit record and the all-cash business model. The CEO came to MyCFO for help, and we found a willing bank, aided in document preparation, and the financing was successful.
Example: Industry concerns hurt bank relations
Our client was a long-time customer of a national bank and the company had always performed on the bank’s covenants and conditions. However, the company’s industry was encountering a slowdown and the bank’s national policies came into play, with the line of credit being curtailed because of precautionary measures. This hurt the business and forced it to look elsewhere for financing, asking MyCFO for assistance. We found a regional bank that understood local industry issues and was more than willing to provide our client with the necessary financing.
Example: Asset-based financing alternative
Asset-based financing is often the choice for businesses that do not have a profitability track record or cannot meet other traditional bank “cash flow based” financing criteria, such as high debt to worth. Asset-based lenders, who aren’t subject to banking regulations, have the freedom to finance non-bankable, thinly-capitalized companies by focusing on collateral. In a recent engagement, our client was a fast-growing company that had substantial cash flow needs to support payroll, purchases of raw material and financing of work-in-process. The accounts receivables were high quality with a low bad-debt ratio, and the inventory was monitored closely to minimize waste and obsolescence. MyCFO sourced a reputable asset-based lender that provided the needed financing, helping the client to maintain its growth curve.
Helping your company to obtain the financing it needs!
The professionals at MyCFO have decades of experience helping our clients to secure cash flow financing. We maintain relationships with a spectrum of banks that can help. Contact us today for a free initial consultation.