I had lunch with Bob, a Peninsula Banker at Cheesecake Factory in Walnut Creek CA June 29th. Here’s Bob’s follow-up email that came in Monday night:
It was great catching up with you today and I look forward to working with you. I have put together a general deal description for you to look over. We will approve credit lines from 100K up to 20MM and for the larger cleaner deals (above 3MM or so)we could price as low as 12-15%. Since I have been here, the deals I have proposed on are in the 18-25% range and the deal size is $500K to $2MM.
We cannot assist clients in construction, agriculture or who bill 3rd party insurance companies, Medicare and/or Medicaid. It is an exception, but we will do inventory components as a complement to the AR line. I am negotiating a deal right now for a furniture distributor that has the goods manufactured in China, has them shipped to the states to a bonded warehouse and they are drop shipped to each customer. Since the goods are in a bonded warehouse we are contemplating giving them some inventory availability. We will advance 80% on the AR and then give them an inventory sub-limit that is capped at 20% of the outstanding AR. We are effectively advancing 100% on the AR.
We have a standard style full notice factoring product and a hybrid product that uses factoring documents, but notice of assignment is not required on the invoices, they can send copies and pricing is as described above which is under market for factoring. We do not at this point have a borrowing base type of ABL product. I also wanted to point out that we do not require our clients to bank with us, so your banker referral sources need not be concerned about that point. In fact, I can include language in each contract that will waive any minimum monthly fees or contract termination fees in the event the client is approved for a bank line with the referring bank.
I would really appreciate any referrals. Call me or send an e-mail anytime if you have any questions or would like to discuss a transaction. I have attached a referral fee agreement that you can review. It contains language written by corporate counsel that you have to collect certain documentation form the prospect if you want to be eligible to collect. fees. I will not hold you to that part of the agreement. If you wish, you can just facilitate the introduction and I can take it from there and I will make sure you are paid your full fee. What the corporate lawyers don’t know won’t hurt them.