Asset Based Lending
Spell Group Capital builds asset based revolving lines of credit and equipment term loans up to $10 million based on approved asset balances such as commercial accounts receivable, raw and finished goods inventory, and machinery & equipment. Our job is to extend a lifeline to companies that banks may not be comfortable with. The result is a powerful form of business financing that works for small to mid-market companies and their various stakeholders.
Typical Clients
- Revenue between $10 million and $100 million
- Capital needs up to $20 million
- Lendable assets including accounts receivable, inventory, and machinery & equipment
- Private or public U.S. company
- Service, manufacturing, wholesale, retail and distributor businesses in all sectors
Typical Circumstances
- Seasonal peaks and valleys in revenue
- Acquiring another business
- Facilitating an expansion
- Refinancing an existing credit line
- Supporting a recapitalization or restructuring/turnaround
- Stabilizing the business with patient
Frequently Asked Questions
Asset-based lending is the practice of providing a business loan secured by collateral (assets). When a company cannot qualify for a traditional commercial loan due to its cash flows or financial performance, one financing alternative may be an asset-based loan. While company performance is a factor in underwriting an asset-based loan, the focus for repayment of the loan is on the prospective borrower’s assets.
Asset-based loans are used by companies that need working capital to solve short-term challenges, seize growth opportunities or transition through performance fluctuations.
Typical circumstances where companies choose to utilize asset-based loans include:
- Seasonal peaks and valleys in revenue
- Acquiring another business
- Facilitating an expansion
- Refinancing an existing credit line
- Supporting a recapitalization or restructuring/turnaround
- Stabilizing the business with patient capital through business cycles
Generally, asset-based financing is available to businesses with assets that can be pledged as collateral and that are not able to obtain financing from traditional sources.
Spell Group Capital finances private and public U.S. companies across all industries.
Requirements include:
- 1+ year in business
- $10MM in minimum annual revenue
- Capital needs from $2MM to $20MM
Since asset-based lending emphasizes the value of accounts receivable, inventory, equipment or other assets, it does tend to be a solution that is more common for asset-rich businesses like manufacturing, business services, and distribution businesses.
The asset-based loan can be secured using inventory, accounts receivable, equipment, real estate, and/or other balance-sheet assets as collateral.
A borrowing base is a formula-driven approach to setting borrowing availability under an asset-based financing structure. Advance rates are set for various asset classes and eligible and ineligible collateral line items are defined. Typically, clients are required to prepare a borrowing base certificate to support availability and advance requests along with supporting reports at periodic intervals established between the borrower and lender. Asset-based lenders inspect ledgers and assets regularly to determine and update the value of the borrowing base.
At Spell Group Capital, our experienced asset-based professionals customize each client’s borrowing base structure, allowing for maximum flexibility as warranted.
Closing time varies greatly by company and situation. Spell Group Capital takes pride in our ability to react quickly to our customers’ needs. We provide an initial proposal within 24 hours of receipt of the required financial documents.
Once a prospective borrower signs a proposal, the formal underwriting process begins. Due to the collateral-heavy nature of the financing arrangement, there are collateral audits and field exams that need to take place that require scheduling and time commitment from the prospective borrower. There may also be requirements for appraisals depending on the collateral involved. Lastly, there is a detailed financial statement and business review that will take place. When all parties are responsive, this process can be completed in under 30 days.
It is important to understand every aspect of a pricing proposal. As a customer-focused provider, Spell Group Capital recommends basing your decision on several factors – not solely on cost. Spell Group Capital considers what a specific client is looking for and weighs it against the risks associated with the transaction to determine the cost.
As in most financing situations, the less risky the deal, the lower the price. And the reverse is true as well. Regardless of the scenario, Spell Group Capital is consistently competitive on price. Our team is happy to do price comparisons and calculations upon request.
If you are interested in learning more about how an asset-based loan can benefit your business or a company with which you work, please call us today to see how we can tailor a capital solution that really fits.
Invoice Factoring
Factoring, also known as invoice financing or accounts receivable financing, is a simple and easy financing alternative that turns receivables into cash. Instead of having to wait 60 days to get paid, factoring allows you to get paid today, immediately improving cash flow. Compared to traditional factoring which is invoice specific, our factoring product operates as a revolving Accounts Receivable line of credit, allowing you to borrow only what you need.
Why Spell Group Capital Invoice Factoring?
- Same day funding
- Clear, upfront fees; no surprises
- Fast, easy approval and funding process
- No personal guaranty
The Spell Group Capital Difference
|
TYPICAL COMPETITOR | WHY IT MATTERS | |
|---|---|---|---|
| PRICING | Pay fees only on funds advanced | Pay fees on full face value of invoices | Transparent pricing - no hidden fees |
| STRUCTURE | Line of Credit | Invoice by invoice advances | Control daily advance amount and costs |
| VERIFICATION | Portfolio-based | Invoice-specific | Less disruptive to customer relationships |
Frequently Asked Questions
The standard advance rate is 85% of the accounts receivable balance. However, at Spell Group Capital, every advance rate is customized for each client and some may qualify for a higher advance rate.
The advance rate alone does not determine liquidity; it is the starting point. Each factoring company will analyze the creditworthiness and willingness of customers to pay their invoices. The more diversified the customer base, the greater the liquidity provided.
To maximize your liquidity with a factoring company, ask about their credit approval process as well as how they evaluate the willingness of your customers to pay.
Closing time varies by factoring company. Spell Group Capital takes pride in our ability to react quickly to our customers’ needs. We provide an initial proposal within 24 hours of receipt of the required financial documents. And, our team can close an approved transaction in as few as 5 business days.
It is important to understand every aspect of a pricing proposal. As a customer-focused provider, Spell Group Capital recommends basing your decision on several factors – not solely on cost. Spell Group Capital considers what a specific client is looking for and weighs it against the risks associated with the transaction to determine the cost.
As in most financing situations, the less risky the deal, the lower the price. And the reverse is true as well. Regardless of the scenario, Spell Group Capital is consistently competitive on price. Our team is happy to do price comparisons and calculations upon request.
Spell Group Capital’s approach to factoring is simple and transparent. Traditionally, factoring companies operate on an invoice-specific basis. That means they look at each individual invoice as a separate transaction, approving and verifying each invoice.
In contrast, Spell Group Capital pools all of your invoices and creates a “borrowing base” or line of credit of total funding available. After delivering products or services, simply submit invoices for inclusion in the borrowing base calculation. Spell Group Capital will update the borrowing base availability daily based on new invoices and collections. When you require an advance, fill out the amount you want, sign the borrowing base certificate and submit it to Spell Group Capital.
Spell Group Capital is a customer-centric company, and your relationship with your customer is just as important to us as it is to you – we uphold the same integrity of the relationship that you have with your customers. When our team selectively contacts our client’s customers, we confirm that they were satisfied with the delivery of products or services and are willing and able to pay the invoice in the ordinary course of business. Many of our clients do not have back-office staff and internal processes to conduct thorough quality assurance calls, so for many clients, this is an appreciated and valuable business service.
The answer will vary based on the factoring company you work with, but for Spell Group Capital clients, the short answer is no, you do not. However, there is no compelling reason not to send all invoices to Spell Group Capital given that you only pay for what you access with our line of credit approach. In fact, sending all invoices is actually a benefit as it 1) provides you with extra liquidity if you ever need it in a pinch, 2) facilitates more collections activity, which will pay your balance down faster, saving you on fees, and 3) is easier to track and manage.
Every situation is unique and customized by client, so which and how many customers we verify will vary. When clients submit the initial batch of invoices for the first funding, Spell Group Capital sets a credit floor based on the size of the pool of invoices against the individual sums of the invoices. Spell Group Capital sets the credit floor to capture the top 4 or 5 customers by dollar amount as that is where the concentration of risk lies. Any customer whose balance is below the credit floor gets full credit approval. For customers that are above the floor, we work with you to assign an individual credit limit.
Spell Group Capital’s line of credit approach provides a distinct advantage for customers. Should an invoice fall out of availability for any reason, businesses may still be “in formula” if you have not accessed the full amount of your availability. In the event you were maxed out when the invoice becomes ineligible, you will most likely be temporarily out of formula. No need to fret! Producing new invoices or receiving collections within the next few days allows businesses to quickly and easily get back within formula.
Spell Group Capital clients are not required to personally guarantee the facility nor do we require financial covenants.
Spell Group Capital finances U.S.-based businesses selling to other businesses (B2B, not B2C).
Requirements include:
- 1+ year in business
- $2MM in minimum annual revenue
- Minimum of $300K in average accounts receivable balances (outstanding invoices)
- Capital needs from $250K to $10MM
Initial financial documents required to establish a relationship with a factoring company may vary slightly, but typically include a summary accounts receivable aging, a summary accounts payable aging, a current balance sheet and a recent profit and loss statement.
Factoring for Staffing Companies
Spell Group Capital Business Capital has experience managing the financial needs and factoring for staffing companies across a wide range of industries including temporary staffing, IT staffing, warehouse staffing, light industrial staffing and others. Whether your agency needs working capital to hire new talent, maximize a marketing opportunity, or extend client payment terms, factoring allows staffing companies to convert unpaid invoices into cash today.
Why Staffing Factoring from Spell Group Capital?
- Line of credit approach
- 65+ years of experience
- Turnkey back office solutions
- Customer-friendly
Elite Staffing
Back Office Solutions
Spell Group Capital has partnered with MVP Staffing to provide back office solutions for staffing companies to minimize the demand on human resources and back office teams. MVP Staffing offers a suite of staff management services and a proven track record for creating efficiencies and streamlining workflows internally. Back office solutions are available as turnkey or a la carte services.
Operating since 2000, MVP Staffing has deep expertise in all aspects of staffing administration and managing staffing needs.
- Workers’ Compensation Insurance
- ACA Administration/Compliance
- HR Front- & Back-Office Technology
- Complete Payroll Services
- Simplified Rate Structure
- Risk Management Consulting & Support
- Taxes & Unemployment
- Direct Deposit & Check Cards
- Financial Reporting
- I-9 Processing & Compliance
Frequently Asked Questions
The standard advance rate is 85% of the accounts receivable balance. However, at Spell Group Capital, every advance rate is customized for each client and some may qualify for a higher advance rate.
The advance rate alone does not determine liquidity; it is the starting point. Each factoring company will analyze the creditworthiness and willingness of customers to pay their invoices. The more diversified the customer base, the greater the liquidity provided.
To maximize your liquidity with a factoring company, ask about their credit approval process as well as how they evaluate the willingness of your customers to pay.
Closing time varies by factoring company. Spell Group Capital takes pride in our ability to react quickly to our customers’ needs. We provide an initial proposal within 24 hours of receipt of the required financial documents. And, our team can close an approved transaction in as few as 5 business days.
It is important to understand every aspect of a pricing proposal. As a customer-focused provider, Spell Group Capital recommends basing your decision on several factors – not solely on cost. Spell Group Capital considers what a specific client is looking for and weighs it against the risks associated with the transaction to determine the cost.
As in most financing situations, the less risky the deal, the lower the price. And the reverse is true as well. Regardless of the scenario, Spell Group Capital is consistently competitive on price. Our team is happy to do price comparisons and calculations upon request.
Spell Group Capital’s approach to factoring is simple and transparent. Traditionally, factoring companies operate on an invoice-specific basis. That means they look at each individual invoice as a separate transaction, approving and verifying each invoice.
In contrast, Spell Group Capital pools all of your invoices and creates a “borrowing base” or line of credit of total funding available. After delivering products or services, simply submit invoices for inclusion in the borrowing base calculation. Spell Group Capital will update the borrowing base availability daily based on new invoices and collections. When you require an advance, fill out the amount you want, sign the borrowing base certificate and submit it to Spell Group Capital.
Spell Group Capital is a customer-centric company, and your relationship with your customer is just as important to us as it is to you – we uphold the same integrity of the relationship that you have with your customers. When our team selectively contacts our client’s customers, we confirm that they were satisfied with the delivery of products or services and are willing and able to pay the invoice in the ordinary course of business. Many of our clients do not have back-office staff and internal processes to conduct thorough quality assurance calls, so for many clients, this is an appreciated and valuable business service.
The answer will vary based on the factoring company you work with, but for Spell Group Capital clients, the short answer is no, you do not. However, there is no compelling reason not to send all invoices to Spell Group Capital given that you only pay for what you access with our line of credit approach. In fact, sending all invoices is actually a benefit as it 1) provides you with extra liquidity if you ever need it in a pinch, 2) facilitates more collections activity, which will pay your balance down faster, saving you on fees, and 3) is easier to track and manage.
Every situation is unique and customized by client, so which and how many customers we verify will vary. When clients submit the initial batch of invoices for the first funding, Spell Group Capital sets a credit floor based on the size of the pool of invoices against the individual sums of the invoices. Spell Group Capital sets the credit floor to capture the top 4 or 5 customers by dollar amount as that is where the concentration of risk lies. Any customer whose balance is below the credit floor gets full credit approval. For customers that are above the floor, we work with you to assign an individual credit limit.
Spell Group Capital’s line of credit approach provides a distinct advantage for customers. Should an invoice fall out of availability for any reason, businesses may still be “in formula” if you have not accessed the full amount of your availability. In the event you were maxed out when the invoice becomes ineligible, you will most likely be temporarily out of formula. No need to fret! Producing new invoices or receiving collections within the next few days allows businesses to quickly and easily get back within formula.
Spell Group Capital clients are not required to personally guarantee the facility nor do we require financial covenants.
Spell Group Capital finances U.S.-based businesses selling to other businesses (B2B, not B2C).
Requirements include:
- 1+ year in business
- $2MM in minimum annual revenue
- Minimum of $300K in average accounts receivable balances (outstanding invoices)
- Capital needs from $250K to $10MM
Initial financial documents required to establish a relationship with a factoring company may vary slightly, but typically include a summary accounts receivable aging, a summary accounts payable aging, a current balance sheet and a recent profit and loss statement.