To Prospective clients and referral partners:
As everyone knows, the credit market is very tough right now. Even businesses with great business credit and outstanding personal credit scores of the business owners are often not getting funding. We got feedback that questions how is it that we can get credit for the most difficult categories of funding requests.
These requests include the following:
- Real Estate Investors who are buying and rehabbing and flipping distressed properties. Or whom own multiple residential properties. They are often turned down unless they have great credit and lots of money. Even if they have the right money and credit, many banks will not fnd them for other reasons. Example: Often if the investor owns more than four residential investment properties with loans on those properties the bank will not fund just because of standard underwriting practices.
- Entertainment Companies, What bank wants to fund a recording artist or a non-A list actor/producer of a small scale film production?
- Sophisticated Investors and Business people. What bank is going to fund an investor for making investments?
- Contractors. (especially anywhere in the construction and residential maintence industries). Many banks and funding sources will not fund contractors. Banks often consider the risk that the contractor might go out of business to be too high.
- Startup Companies. Banks very very rarely will fund a startup company. Usually these fund only from subsidies of the founders, founders family members and friends and occasionally from angel investors. If outside investors do become involved then often times huge percentages of company ownership have to be given away. What could be better then getting funding without giving up ownership. And yes! we do almost every type of startup from high technology to retail stores.
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Credit Challenged Business Owners. Even with a profitable business these people especially in small businesses usually get turned down.
How can we get the client requests above funded?
We typically do it through packaging companies that are run by "Program Managers." The packaging company will take ownership of a seasoned corporation that is anywhere from 2 years old to 20 years old. In some cases these are corporations that while not active now, used to be fully operating businesses with tax returns, DNB and Experian Business credit scores, etc.
Then the packaging company will attached numerous credit enhancement items to that company.
Finally, in many cases, it is necessary for the packaging company to provide a CFO who acts as a personal guarantor for a period of time. In some cases, the CFO even provides collateral.
The seasoned corporation is then sold to the one of the client types above.
This program is not for everyone. It is expensive. There are upfront fees. There are backend fees. But, in many cases it is a very good solution for fund raising. The buyer of this corporate asset will not have to give up any equity in their business venture. We can get these packages with gross funding amounts from $200K to $5 million. In some cases multiple corporations are needed when going over $1 million in funding. We also have one packaging company that provides a "Self-Liquidating" feature. This means that the loan will actually pay itself off after a period of time.
If you are interested in these products please contact Joe Tufo at 800-669-2700 or help@joetufo.com
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