Small Businesses need Financial Consulting Expertise

Small Businesses need Financial Consulting Expertise

April 2017

The owner of a small business winds up wearing many hats. He or she may have to manage sales and marketing, operations, human resources, as well as financial administration. Even if the business has a bookkeeper or controller, they may not be aware of the multitude of alternative financial capital resources that a business can access for continued growth of the business, or for a turnaround after a period of difficulty. Most small business owners think that applying for a loan at a commercial bank is the only available option, and then get frustrated and desperate upon the application being rejected.

Small business finance consulting is where Cambridge Financial Services continues to make an impact. Here are two recent client stories that demonstrate the Cambridge Financial advantage.

A small filling operation, with about $2 million in annual revenue, was having difficulty sourcing outside capital for growth. The personal and company credit was a little tarnished, resulting in loan applications constantly being rejected by commercial banks and other traditional lenders. Cambridge Financial’s consultant determined that the company would be a perfect candidate for factoring arrangement, whereby the factor would “purchase” the company’s accounts receivable and provide cash funding up front to grow the operation. (Factors are comfortable dealing with companies with credit issues because they are more concerned about the credit of the account receivable which they are purchasing.) Cambridge Financial solicited five factoring companies to provide proposals, and negotiated the best terms and conditions possible for our client. The client consummated the arrangement and is now growing revenue nicely.

A flooring company producing roughly $10 million in annual sales wanted to take on larger contracts, but lacked a large enough line of credit to support the necessary cash flow funding to take on the work. The client informed Cambridge Financial that for some reason their current bank did not want to increase the established line beyond the existing $500,000. Upon further investigation, Cambridge Financial’s consultant determined that the reason for the hesitation was because the client only submitted federal tax returns with the bank application. The tax returns were prepared on a cash basis, which did not portray the company in a good light. The company had substantial accounts receivable which did not show up in the cash based financial statements. In addition, the bank was a large national bank, and this was a relatively small credit for that institution. His contact was a lower level loan officer that did not take the time to dig deeper into the numbers.

Cambridge Financial’s consultant understood that an accrual based financial statement would indicate the true, credit worthy nature of the borrower. With the company’s accountant, he put together a descriptive credit proposal that supported the request, and marketed it to community and regional bankers to get a higher officer level to review the submission. The result was that the client replaced the existing bank and closed on a $1 million line of credit to support growth.

Nick Jalowski, Managing Director of Cambridge Financial comments, “our consultants are constantly involved in the debt markets and have their fingers on the pulse of all the alternative financing vehicles that are available to small and middle market businesses. As a result, we bring options to the table that the business owner did not even know existed. Once engaged, we work diligently to obtain the best result possible when seeking funding.”

Think you can’t get funding for your business? Think again. Call Cambridge Financial.