Post on 15-Apr-2017
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 rainstarcapitalgroup.com
ALTERNATIVE COMMERCIAL FUNDING OVERVIEW
“Our obligation is to serve entreprenuers in growing their real estate and business ventures by providing access to alternative funding. We welcome the oppourtunity to earn your business!”
CEO- Kurt Nederveld
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
ALTERNATIVE COMMERCIAL FUNDING OVERVIEW
WHAT IS ALTERNATIVE COMMERCIAL FUNDING?
Alternative lending is a broad term used to describe the wide range of loan options
available to consumers and business owners outside of a traditional bank loan.
These alternative options are most commonly used when an individual or business
owner cannot obtain a traditional bank loan for any number of reasons. Alternative
lenders specialize in utilizing overlooked sources of collateral such as real estate or
even outstanding invoices to secure the loan. They are typically more flexible than
banks when it comes to repayment schedules and loan approval and often provide
cash much faster than their traditional banking counterparts. The alternative
lending industry is well-established and generally staffed by well-respected
members of the financial services community.
While alternative loans may sometimes have higher interest rates than traditional
bank loans, they fill the gap for small businesses everywhere, providing much
needed funding for cash-strapped businesses that have been unable to obtain a loan
or line of credit from traditional banks, thereby giving the business owner the
opportunity to invest back into the business, manage cash flow and continue to
operate for years to come. Any reputable alternative lender will speak with you at
length about the best loan program for your business.
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
TYPES OF ALTERNATIVE BUSINESS FUNDING
CASH FLOW ADVANCE
FACTORING OR ACCOUNTS RECEIVEABLES FINANCING
ASSET BASED LOANS
EQUIPMENT LEASING/FINANCING
SECURED AND UNSECURED LINES OF CREDIT
CROWD FUNDING
CASH FLOW ADVANCE
Cash Flow Advance, has many different names such as, Revenue Based Advance,
Merchant Cash Advance, Bank Statement Advance and ACH Advance.
The KEY word in each of these names is ADVANCE. A Cash Flow Advance IS
NOT a loan. A Cash Flow Advance is when a funder advances a merchant or
business money based on their historical revenue and the likelihood that that
merchant or business will continue to average the same amount of revenue in the
future.
Cash Flow Advances make up 90% of the funding that Rainstar Capital Group
facilitates. These advances are easy for a business to qualify for and the typical
turnaround time is 24-72 hours.
Years ago, Merchant Processing Companies offered their merchants a cash flow
advance that was called an MCA or a Merchant Cash Advance. With an MCA, a
funder analyzes the past 4 months of a merchant’s credit card processing
statements to determine how much of an advance the merchant qualifies for. The
amount a merchant pays back is a small daily percentage (9% to as high as 32%) of
that credit card revenue for a period of 3 to 18 months.
For example, Mary’s Flow Shop over the past 120 days (4 months) has an average
total monthly revenue of $25,000 per month, with $20,000 of that revenue being
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
credit card receivables, or sales that customers used their credit cards to pay with.
With other qualifying factors considered, a funder will advance up to 200% of the
average monthly credit card receivables. In this example, Mary’s Flower Shop was
offered $22,000 to be paid back over 9 months with a daily percentage of 15%. So
if Mary averages $20,000 per month in credit card revenue, it is safe to assume her
average daily revenue per month is around $1000.00 per day. (30 days per month,
minus 8 Saturdays & Sundays) If she averages $20,000 per month, that is divided
by 20 (Sat & Sun are not included) days to equal $1000.00.
Mary has agreed to allow the funder to take 15% of her daily credit card sales for 9
months as payback on the $22,000 that is advanced to her.
$1000.00 x 15%=$150.00
9 Months= 180 payments
180 x $170.00=$27,000
PLEASE NOTE:
Funders require daily debits as payback Monday through Friday, excluding
holidays.
In the Cash Flow Advance arena there are 20 payback days in a month. For
example:
3 month term means there are 60 payback days per month
4 month term means there are 80 payback days per month
5 month term means there are 100 payback days per month.
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
While MCA’s or Merchant Cash Advances were very popular some 10 or so years
ago, there has been a new kid on the block. This new kid is commonly called, ACH
or Bank Statement Advance.
Funders realized that not all merchants and/or businesses accepted credit cards. If
the banks said no, these businesses were often left out in the cold in the alternative
commercial funding arena. Realizing a new funding model, funders began offering
these businesses an advance based on their total monthly revenue, whether or not
that business accepted credit cards.
For example…. Joe’s Taxi Company had been in business for a couple of years
and he needed to make some expensive repairs to some of his cars, but banks said
no. Joe’s Taxi Company was pretty much an all cash business. Upon analyzing
Joes past 4 months business bank statements, it was determined he averaged
$33,000 per month in gross revenue. With all things considered, a funder will
advance a business anywhere from 40% to 85% of their average monthly revenue
for an ACH or Bank Statement Advance over a 3-18 month term. Joe was offered
$21,450 at a discount factor of 1.38 for 6 months.
Since this is not a loan, there are no interest rates. On ACH Advances, the
payback is calculated using a discount factor anywhere from 1.18 to 1.50 and
sometimes higher!
In Joe’s case, he has total payback of $29,601.00.
$21,450 x 1.38= $29,601
6 month term or 120 Days of payments
$29,601 divided by 120 days= $246.67
Joe’s account will be debited $246.67 daily Mon thru Friday for 6 months.
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
PLEASE NOTE:
Even though, good credit is not required to receive an advance, the personal
credit of the owner is part of the determining criteria of what discount factor
a merchant will get. The better the credit, the better discount factor a business
receives.
Example: Often credit scores 650+ can expect discount factors ranging from
1.18 to 1.28.
REVIEW
A Cash Flow Advance is not a loan, it is an advance based on the historical
revenue and the propensity of a business to continue that same average revenue.
With a Merchant Cash Advance (MCA), a business must accept credit cards.
Credit Card processing statements are reviewed to determine a merchant’s
eligibility to obtain an MCA. A business can expect to receive up to 200% of their
gross monthly credit card revenue.
With an ACH or Bank Statement Advance, a business DOES NOT have to accept
credit cards. 4 months of business bank statements are analyzed to determine a
merchant’s eligibility to obtain this advance. A business can expect to receive 40%
to 85% of their gross revenue.
Cash Flow Advances are short term. Terms typically range from 3 months to 24
months. 9 months+ is uncommon for most businesses. Businesses who receive
terms 9+ months often include healthcare businesses and businesses where the
personal credit of the owner is 680+.
With an MCA, a business will be debited daily Mon- Fri, excluding holidays,
anywhere from 9% to as high as 32% of their credit card sales revenue to pay the
advance back.
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
On an ACH or Bank Statement Advance, a business has a set amount debited from
their bank account daily Mon-Fri, excluding holidays.
In terms of a payback month, funders typically count 20 payback days per month.
Some businesses may qualify for weekly debits instead of daily.
HOW DOES A BUSINESS QUALIFY FOR A CASH FLOW ADVANCE?
Minimum 450 credit score
Time in business: 6 months
Must have business bank account
Minimum Gross Revenue: $10,000/mo
Tax Liens over $25K should be on a payment plan
Bankruptcy must be discharged
No more than 5 negative days per month on bank statements
RAINSTAR CAPITAL GROUP FUNDING PROGRAM
PROGRAM TERM FUND CAP POSITIONS ACH/MCA CREDIT MIN TIME IN
BIZ
FACTOR RATE
A UP TO 18 MO
$2M 1ST ONLY BOTH 650+ FICO
1YRS 1.18+
B-C 6-9 MO $300,000 1ST & 2ND
BOTH 470+ 4 MO 1.35+
HIGH RISK
1-4 MO $150,000 1-3 BOTH 450+ 4 MO 1.40+
Minimum Annual Revenue: $100,000 and Minimum Avg Daily Bank Balance: $500
Number of Negative Days: Up to 7 in 3 consecutive months. No more than 9 in a recent month
Tax Liens- Must be on a payment plan if over $25K
Bankruptcy- Must be discharged
No industry restriction on High Risk Program
A UCC search will be done prior to funding and a UCC filed post closing
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
Some programs require origination and processing fees that are deducted from the advance. Please
note that RAINSTAR CAPITAL GROUP DOES NOT CHARGE UP-FRONT FEES OF ANY TYPE.
ARE THERE ANY INDUSTRY RESTRICTIONS?
The following list of industry types are typically PROHIBITED with A paper
funders, however, we have a home for every industry type:
Accounting services (including tax prep) Entertainment Groups
Adult Entertainment & Retail Finance Companies
Attorneys Gambling/Casino
Auction Houses/Flea Markets Heating Oil Sales
Auto Sales & Rentals Kiosks
Bail Bondsmen Mortgage Lenders
Brokers Non Profit Organizations
Cannabis Growers & Sellers Pawn Shops
Cell Phone Shops Payday Loan
Check Cashing Real Estate Investment
Class 3 Weapons Dealers Religious Institutions
Collection Agencies Video Sales & Rentals
Consignment Shops Insurance Agencies
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
WHAT ARE SOME PREFERRED INDUSTRY TYPES?
Assisted Living Facilities Amusement
Auto Repair Appliance Dealers/Sellers
Bakeries Architecture Firms
Barber Shops Caterers
Beauty/Cosmetic Supply Store Clothing Wholesalers
Bike Shops Construction /Contractors
Bowling Alley Convenience Stores
Coffee Shops Daycare
Card & Novelty Stores E-Cigarette
Dental Practices Electricians
Donut/Bagel Stores Fuel Related
Drug Stores Furniture/Mattress
Franchised Concepts Grocery Stores
General Merchandise Stores Home Based Businesses
Gift Shops Hardware Stores
Home Health Care Home Improvement
Hobby Shops Hospitals
Hospital Equipment Hotel/Motel
HVAC Ice Cream Stores
IT/Communications Internet Retail
Laundry & Dry Cleaning Learning Institutions/Day Care
Liquor Stores Lumber/Wood Products
Medical Practices Mining
Merchant Wholesalers Nightclubs
Pet/Pet Supply Printing/Publishing
Restaurants Radio/Television
Recreational Vehicles Salon
Sporting Goods Transmission Shops
Tanning Salons Transportation/Freight
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
Theaters Tobacco & Cigar Shops
Toy Stores Veterinary Services
Vending Food/Beverage Web Retail
Distribution Manufacturers
Landscaping Nail Salons
REQUIRED DOCUMENTATION:
SIGNED- 1 Page Application (Electronic Signatures are NOT
acceptable)
4 Months Business Bank Statements
4 Months Merchant Processing Statements (if business accepts credit
cards)
Photo ID
Voided Business Check
Copy of Business Lease or Mortgage Statement
In Some cases, especially on higher advance amounts and seasonal businesses,
additional documents may be required:
YTD Profit & Loss
Additional Bank Statements
Complete Tax Returns
Articles of Incorporation
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
STEPS TO GET DEALS FUNDED
Submit minimal documentation for funding pre approval/offers
Signed 1 Page Application
4 Months Business Bank Statements
4 Months Merchant Processing Statements if applicable
Within 4-24 hours, processing will email you a spreadsheet with funding offers for
your merchant. See Example Below
Dear Joe,
Please see the offers below for Mac’s Heating & Air. Please discuss these options
with your client and let us know which offer he would like to go with.
ADVANCE FACTOR TERM PAYMENT COMMISSION
$22,300 1.32 5 mo 294.36 daily $1115.00
$17,250 1.26 4 mo 271.68 daily $862.50
Once we know which offer your merchant accepts, a contract will be emailed to
him/her for either a wet signature or an electronic signature. At this time an email
will also be sent to you, requesting the documents needed to fund the file.
Typically this will be: copy of photo id, voided business check and lease/mortgage
statement.
Upon receipt of signed contract and documents, the file will be sent for final
underwriting.
Underwriting will verify landlord/lease, verify bank account, call the merchant to
discuss the terms and make sure he or she understands the advance.
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
Upon successful completion of the above due diligence, the file will move to
funding review.
After verification that everything is in order, a wire will be sent to your merchant’s
account.
ONCE SIGNED APP & DOCS ARE RECEIVED BY UNDERWRITING
THE TURN AROUND TIME IS TYPICALLY A FEW HOURS TO 1 DAY.
OTHER TYPES OF ALTERNATIVE
COMMERCIAL FUNDING
FACTORING/ACCOUNTS RECEIVEABLES FINANCING
Factoring is a form of alternative financing that will not only get a business the
working capital it needs, but it is a great way to streamline accounting – even
businesses who do not need money use factoring. Factoring is a method by which
companies sell their overdue accounts receivables to a collection company in
return for cash. For example, a manufacturing company has clients with
outstanding bills, but diverting time and payroll hours to have someone hunt down
that money would be a waste of resources. By selling those bills to a factoring
company, the business receives money (minus a percentage fee from the factoring
company), and they take the headache of tracking down the owed money off of the
company’s hands. Factoring is a great alternative financing method that allows
businesses to receive working capital from customer bills that might otherwise not
yield a single penny in a timely manner. Many businesses sell all outstanding
customer bills to factoring companies after 90 days or so, just to stave off any
strain on the cash flow, and to take any additional strain off of the accounting
department.
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
ASSET BASED LOANS
For companies that manufacture goods, restaurants, IT companies, beauty salons –
basically, any business that uses equipment – asset based lines of credit are a great
alternative business funding method. Lenders will extend lines of credit based on
the value of the equipment and hard assets owned by the business (and, by
extension, the business owner). The higher the value of the assets and equipment,
the greater the line of credit and access to working capital that can be extended to
the business.
EQUIPMENT LEASING/FINANCING
Can be used to purchase or lease, new or used commercial equipment or vehicles.
Customer must have at least a 500 credit score and some business credit history
that shows they can support the pay back on the lease. If there is no business credit
history, a guarantor’s credit score must be at least 680.
The vendor is paid directly for the invoiced merchandise.
Typical payback is 2-5 years with set monthly payments. Rates can range from 8%
to 30% depending on the credit risk
Some programs, especially for trucking companies, a down payment may be
required or the borrower can put up collateral that is valued 2X the value of the
trucks and equipment being purchased.
SMALL BUSINESS TERM LOANS & LINES OF CREDIT
We offer a small business loan product. To qualify a business must meet the
following qualifications:
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
o Min 640 credit score
o Min 2 years time in business
o Provide 2 year financial package to include (personal & business tax returns,
aged a/p and a/r reports, year to date profit & loss and year to date balance
sheets, personal financial statement)
o Min $250K a year in gross revenue
o Loans & Lines of Credit up to $1M.
o 7-10 day turn around time
o NO NEGATIVE CREDIT HISTORY ON CREDIT REPORT (no
bankruptcy, foreclosure, judgements or collections)
o Paybacks are bi-monthly & monthly depending on program
o Rates 7.99% to 19.49%.
o Terms are 1 year to 5 years
Commercial Real Estate Funding Programs
PRIVATE AND HARD MONEY
We specialize in Private Money and Hard Money for commercial and residential
investment deals. Our lenders lend on deals 100k and up on all asset classes. We
have specific programs for Fix and Flip Investors who need access to reliable
funding. For commercial deals our lenders will specifically lend on multifamily,
hospitality, office, industrial, self-storage, specialty use properties, owner occupied
and land.
BRIDGE LENDING
We work heavily with the top hedge funds, banks, specialty finance lenders, family
offices and private equity firms that provide bridge loan products for deals seeking
capital of 1M and up. Our lenders will provide bridge financing on multifamily,
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
hospitality, office, industrial, self-storage, specialty use properties, owner occupied
and land.
CONVENTIONAL LENDING
Where banks say no, we say yes. Our national lending platform of lenders across
the U.S. that have a focus nationwide and deliver solutions that clients may not be
able to get from local sources. Getting your deal funded is about who you know
and we have built the right relationships for you with the right lenders saving you
valuable time, money and resources!
SBA PROGRAMS
We work with the top local and nationwide SBA lenders that fund
deals nationwide The SBA offers many great programs from their SBA 7A to SBA
504 programs specifically designed for owner occupied properties. If you are a
business owner looking for capital- reach out to us to discuss how an SBA loan can
be your solution!
CONDUIT LENDING
Our Conduit lenders provide conduit loans for borrowers who are seeking the
lowest permanent fixed-rate pricing. Our Conduit lenders lend on multifamily,
hospitality, office, industrial, mobile home parks, warehouse, self-storage, and
retail (NNN) properties.
HOSPITALITY LENDING
Our nationwide lenders can provide for flagged and non-flagged hotel/resort
properties purchase, refinance and PIP (Property Improvement Plan) financing for
properties nationwide. Please contact us if you need Hospitality Financing!
Email: Kurt@rainstarcapitalgroup.com Phone: 616-821-6535 Rainstarcapitalgroup.com
MULTIFAMILY LENDING
Our nationwide lenders can provide loan products 100k and up on any multifamily
unit size 2 units and up. Fixed rate, interest only and floating rate are all available.
ASSET BASED LENDING AGAINST LUXURY ART, YACHTS, CARS
We have relationships with hedge funds that look to provide short term asset-backed loans for individuals
and business owners in need of fast capital who wish to bypass the time-consuming, paper-intensive
process of a traditional bank loan. Our lenders allow clients to borrow up to $50,000,000 against personal
luxury assets like high-end motor vehicles, luxury watches and jewelry, precious metals, fine art, boats,
and more.
If your business is seeking funding or you are looking to join the Rainstar
Capital Group team as a broker, ISO or in house sales representative please
contact our CEO- Kurt Nederveld.
Kurt Nederveld
CEO
Direct: 616-821-6535
Email: Kurt@rainstarcapitalgroup.com