Stephen F. Moss

Start-up, under capitalized, and rapid growth companies often find that their cash flow does not keep up with expanding customer orders and other business opportunities resulting in a loss of new business due to lack of satisfactory inventory levels to support rapidly growing sales volume.

These same companies often find that when it comes to bank loans, despite the prospects of excellent future business, they simply do not have the assets or annual profits to support a bank line sufficient for their growth needs.

Therefore, in recent years, thousands of undercapitalized but growing companies have turned to the Commercial Finance Industry for asset based loans to support future growth. Commercial finance companies commonly make flexible business loans based on the borrowers accounts receivable, inventory and equipment.

Many companies who would not qualify for a bank line based on strict financial statement standards will qualify for an asset based loan, because the lender is primarily interested in the quality of the asset being financed.

For a business growing faster than its cash flow can support, a flexible loan based on the company's own assets is generally the best available solution because commercial finance loan limits are based on a set percentage of the asset being financed. Therefore, the borrower, in effect, is using his own growing sales to produce an accounts receivable base which allows the lender to loan the funds necessary for the borrower to purchase new inventory which produces even greater sales and an ever increasing cycle of new

sales opportunities.

Fees and interest may be somewhat higher than a bank line, but nevertheless, for a business growing faster than its cash flow could support without some type of financing arrangement, a flexible loan backed by the company's own assets may be the only practical answer to maintaining long term growth.

Stephen F. Moss is the president of G & J Financial Services and

A & M Financial Services. Mr. Moss has been active in the factoring and commercial finance area for thirty seven years and in 1994 started G & J Financial Services which is a commercial finance company specializing in asset based loans for small companies. For more information regarding Accounts Receivable Financing, Factoring, or Receivables Collection contact either Steve Moss or Hank Kalin at 818-881-1446.

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