Resources & Tombstones: Articles

Asset Based Financing v. Factoring

Asset based financing (ABL) and factoring are two distinct methods of obtaining working capital for businesses:

ABL involves using a company’s assets (inventory, equipment and accounts receivable) as collateral to secure …More

When Real Estate Is a Deal Component

Sometimes, financing deals have real estate components to them. Some lenders lend against real estate; some don’t. We don’t but we have contacts in different market segments who do, to …More

Tips for Business Owners To Re-Build Bank Relationships

The pandemic’s impact on businesses was widespread causing strained banking relationships for many. To regain trust and access to bank financing once again, in addition to fixing whatever problems the …More

Acquisition Financing

Many times, new deals, or our existing clients, are presented with opportunities to acquire existing businesses and we’re asked for help. Our help is two-fold. First, we’ll analyze and provide …More

The Importance of a Sound Accounting Department

Small, growing businesses with inadequate people in their accounting departments could be in for a rude awakening if they can’t plan and manage cash flow correctly. Cash flow is critical …More

President’s Message (July 2023)

Rapper 50 Cent made a movie called Get Rich or Die Tryin’. One of the lines from that film was, “When I’m right, I’m right…and when I’m wrong, I could …More

You Broke a Loan Covenant. Now What?

You broke a loan covenant. Though not ideal, it happens. But should it? Technically, no because you should be monitoring your covenants. With monitoring, you’d know if you had an …More

Equipment Loans at Celtic Capital

Please use this as a quick reference guide. It outlines the parameters of Celtic Capital’s Equipment Loan Program.
 
Equipment-Only Loans

For existing manufacturing equipment owned by the Company in a facility (where …More

What Does Your A/R Turn Rate Say About Your Business?

Accounts Receivable (A/R) Turnover is a financial metric that measures how efficiently your company is able to collect customer payments. It’s an important metric in that it provides insight into …More

Negotiating an Intercreditor Agreement

Intercreditor Agreements are used when there are multiple lenders financing multiple assets from the same borrower. They establish the priority of each lender’s claim on the borrower’s assets and set …More

Why Cash Flow Planning Is Critical

Cash flow planning (CFP) is essential to manage your financial resources effectively. It involves projecting future cash inflows and outflows to ensure that your business has enough cash on hand …More

Navigating Uncertainty in the Banking Industry

Given the two recent bank failures (Silicon Valley Bank and Signature Bank), one of the main questions now is how this will impact the industry as a whole. We’ve already …More

Top 10 Reasons Borrowers Choose Celtic Capital

For struggling businesses, finding a non-bank lender can be challenging. Let us make it easier for you. Here’s a list of the top 10 reasons our clients turn to …More

Three Benefits for Banks Working with Celtic Capital

#1
When a bank exits a client to Celtic Capital, we don’t require the banking relationship to move away from the bank. That gives the bank a foot in the door …More

Asset Based Lending V. Merchant Cash Advance Loans

Asset based lenders (ABL) are focused on collateral (receivables/inventory/equipment) and lend against the value of those assets. Merchant Cash Advance lenders (MCA) focus solely on cash flow and not on …More

Credit Tightening Creates a Pipeline of New Business

We’re currently in a cycle of high inflation and fed rate raising. From a historical perspective, rates aren’t that high, but they are compared to where they’ve been more recently; …More

Bankruptcy V. Self-Liquidation

When a business decides to cease operation and file for bankruptcy, everything stops until any interested party gets relief from the stay through the court, and this can take weeks …More

President’s Message (January 2023)

In my last Letter (July 2022), I was pretty upbeat which was a refreshing change from the previous couple of years. And even though deal flow in the second half …More

Equipment-Only V. CapEx Loans

At Celtic Capital, we make equipment-only loans on existing manufacturing equipment (and/or rolling stock) that’s company-owned and housed in its own facility. As we’re looking for the equipment to be …More

The Importance of Keeping Your Business’ Governance Documents Up to Date

Oftentimes, when you (business owner) set up your business, you set up Articles of Incorporation with the state along with Bylaws of how the company will be managed and run. …More

Business Owners: How A/R Turn Affects Your Business

True or False. Take this short quiz to see how much you understand about A/R (Accounts Receivable) Turn and its importance to your business:

Your A/R Turn rate tells you how …More

Commercial Bankers: Before Exiting a Client…

Bankers looking to exit a client would benefit from taking a look at the borrowing base criteria from the standpoint of a non-bank lender. Why? For one, it’s impractical to …More

Communication With Your Lender Is Key to Managing Your Borrowing Base

When you’re not financing (or unable to finance) your company with an open line of credit through a bank, your company’s cash flow is managed one of two ways – …More

Deals Don’t Always End Up the Way They Start Out

Every deal is different. Every deal has challenges. Some of the challenges (and possible solutions) are known up front; others come out of due diligence. ABLs must be willing to …More

Why Having a Handle on Cash Flow Matters

Over the last couple of years, COVID PPP, EIDL and ERTC refunds flowed into the market saving a lot of struggling businesses. Now that we’re past COVID (from a business …More

Understanding the ABL Monitoring Process

We’re often asked why we do field exams three times a year along with ongoing verifications. The general answer (and as is the case with all lenders) is these processes …More

President’s Message (July 2022)

I’m happy to report that this Letter is filled with good news. What a refreshing change.

When I wrote my January Letter (in December, 2021), I said that EIDL were set …More

Concentration As It Applies to SMBs

Concentration is the amount of accounts receivable (A/R) due from a single customer or when a few customers represent a sizeable portion of a company’s total sales. Lenders may impose …More

Asset Based Lending Is a Short-Term Fix

A bank turns down your loan request or you’re with a bank and your banker asks you to find new financing. What should you do? In both cases, it’s …More

Some Basic Differences Between ABL & Factoring

When you need to find an alternative to bank financing for your business, you have options, the most common being asset based lending (ABL) and factoring. Understanding some of the …More

How Celtic Capital Evaluates Equipment

If you’re looking to offload a client and there’s an equipment piece, it’s a good idea to show us any existing appraisals you have on the equipment. That way we …More

Commercial Bankers: You Can Say “No” and Still Have a Happy Client

It may sound farfetched, but here are two scenarios in which banks can say “No” yet keep their clients happy:

A bank has a line of credit with a client who …More

Need To Switch Lenders? Here’s How.

If your bank isn’t giving you the capital you need or if you’ve been asked out of your bank, the first thing you need to do is ask, “Why?” Talk …More

EIDL Subordinations: The Long and Short of It

We’re coming to the point in time when banks will be looking to exit companies propped up by government-sponsored stimulus money and programs (PPP and EIDL). While PPP money poses …More

5 Tips for Moving Out of EIDL

Tip #1
If you’re carrying an Economic Injury Disaster Loan (EIDL), be aware that for any change in financing you want to do, you need to deal with your EIDL first …More

’08 Recession V. COVID-19 Pandemic

We thought it might be interesting to compare and contrast the ’08 recession to the current COVID-19 pandemic. We found some notable differences:

In ’08, with no credit available in the …More

Are Your Loans Secured or Unsecured?

As a lender, this question comes up when asking potential borrowers about their bank payoffs. We go through the balance sheet with them to clarify what other secured creditors they …More

President’s Message (January 2022)

You’ve undoubtedly heard the phrase, “May we live in interesting times.” These past two years, as the pandemic has wreaked havoc on the small lending community, have definitely been interesting …More

Celebrating 40 Years in Business

I’m proud to announce that 2022 marks a new milestone in the history of Celtic Capital – our 40th Anniversary in business. Over the years, we’ve helped hundreds of businesses …More

Mark Hafner Inducted Into SFNet Hall of Fame

A Letter from Alex Falo on Mark Hafner’s Induction Into the SFNet Hall of Fame

November 2021

It is with great honor that I write to you about Mark Hafner’s recent induction …More

5 Tips To Overcome Lender Objections

There are generally three scenarios in which business owners can’t get bank financing:

Their loan is non-performing, and they’re asked to find new financing.
The business doesn’t fit capital, debt or profit …More

Don’t Risk Losing A Client When Our Equipment-Only Loans Can Save The Relationship

Lenders – when you’re not comfortable extending additional credit to a borrower, Celtic Capital can help. We do Equipment-Only Loans that will enhance your existing client relationships; not compete with …More

When Will a Bank Take Me Back?

We’re often asked: “The pandemic led to my business losing money and my bank asked me out. When will the bank take me back?” Our answer is, “If you do …More

How to Turn Your Turndowns into Clients

Given the pandemic, you’re probably seeing many prospective business clients that are un-bankable. They may have suffered losses in 2020, gone through their PPP money or are finding their EIDL …More

PPP and EIDL’s Impact on Business

If you own or run a business, when you think about COVID’s effect on your business, the perspective is really about the effect of any PPP money you received and/or …More

A/R Turn Rate Never Lies. What’s Your Turn Rate Telling You?

Do you know the turnover rate of your receivables? You should. It’s one of the most important numbers to know because it tells you how long it’s taking your customers …More

Commercial Bankers: Given COVID, Where Are Your Marginal Clients Now?

With inflation an issue and an economy that may take a dip in the fourth quarter once COVID spending is behind us, now is a good time to begin assessing …More

President’s Message (July 2021)

In January, I closed my Letter with, “Wishing everyone a better year.” We’re now halfway in and while Celtic Capital’s new business activity and number of proposals issued have improved, …More

What Asset Based Lenders (ABL) Look for Besides Collateral

Business owners often ask what lenders want in their relationships with borrowers. For Celtic Capital, it’s two things:

Good Communication
Timely and accurate reporting

Good communication because lenders need to understand what’s going …More

90 Day V. 30 Day Extensions

The Scenario:

A bank deal
The bank can’t assist anymore (company is either in trouble or growing too fast)
The bank asks the company out and gives it 30 days to exit
At the …More

Bank Payoff Hurdle Eliminated for EIDL Borrowers

An unexpected consequence of COVID’s effect on businesses this past year has been the challenge imposed on small, independent finance companies to bring on new deals. First there was PPP …More

A Fact-Based Approach to Asset Based Financing

FACT: You own a small business
FACT: Your business doesn’t qualify for bank financing or your bank has asked you to seek alternative financing
FACT: Asset based financing is a great solution …More

Business Owners: Bank Asks You Out. Now What?

When your bank asks you to exit, don’t panic. This may just be the best way to get your business back on track. And don’t ask for an extension. Prolonging …More

Commercial Bankers: For Maximum Recovery, Exit Deteriorating Deals Quickly

When banks look at a portfolio company, see it deteriorating and know it’s going to be asked out, the sooner, the better. Don’t prolong the inevitable, get in front of …More

Equipment Appraisals: How Much Could You Get?

Equipment appraisals can vary depending on the appraiser. And for a lender, who the appraiser is, is critical. Sometimes, we see appraisals from people we’ve never heard of and we …More

You Keep the Credit Line. We’ll Take the Equipment

Although we’re a full service shop, we also do equipment-only financing – appropriately evaluating equipment on the front end to, if needed, get out equitably on the back end.

If you’re …More

A Less Subjective Method of Inventory Valuation

Recently, we’ve fielded questions about how asset based lenders evaluate inventory. The following is an article we wrote a few years ago that’s still applicable today. The policy outlined is …More

How Secure Are You with Your Bank Financing?

If your business has been impacted by COVID, (regardless of whether or not you received PPP money) you should be talking with your bank. Show your banker 2020 year-end results …More

Are You Preparing Your Clients for a Bank Exit?

After almost a year of COVID, banks undoubtedly have a policy about how they’ll look at PPP money’s effect on their clients’ businesses. The issue is: if a business has …More

PPP Money Running Low; Now What?

Businesses received PPP money in April and May of 2020. Hopefully, those that truly needed the money to cover cash flow shortages did some accompanying cash flow planning to project …More

President’s Message (January 2021)

While 2020 is technically now history, its after-effects are still being felt. What a year it was and we’ve yet to catch our collective breath. As of the writing of …More

The Two Types of Borrowers You Don’t Want to Be

All too often, we find two categories of borrowers each of which actually hinder the growth and success of their businesses – most times, without the borrowers even realizing it. …More

Bank Participations

At Celtic Capital, we’re always open to the idea of participating with banks on deals; for a few reasons. From our point of view, participations are good for borrowers because …More

Equipment-Only Loans at Celtic Capital

We get many questions from business owners about our Equipment-Only Lending Program so we asked Mark Hafner, President and CEO of Celtic Capital, a series of questions to clarify the …More

6 Criteria To Analyze Business Loan Proposals

You own a business and for whatever reason, you’re unable to secure traditional bank financing. You’ve been referred to some alternative lenders and you have proposals from three of them. …More

Referring Clients to the Right ABL

As a referral source, especially a bank looking to exit a deal, it’s extremely important to have confidence in the asset based lender to whom you refer. It’s always best …More

PPP and the Importance of Cash Flow Planning

Part of the government’s COVID-19 stimulus package was the Paycheck Protection Program (PPP) – a loan designed to provide a direct incentive for small businesses to keep their workers on …More

President’s Message (July 2020)

In my January letter, I said we’d have “more of the same” this year. Well…we did…for two months. Obviously, COVID-19 was not something I could have predicted. The virus hit …More

A Short-Term Financing Solution When Banks Say “No”

Businesses have life cycles. They go through good time and bad times. During the bad times, many business owners find it difficult to get the financing they need from traditional …More

Reporting Structure is One of the Biggest Differences Between Banks and Asset Based Lenders

When bank clients are asked to leave the bank, sometimes business owners ask what the difference is between being with a bank versus an asset based lender. Besides the obvious …More

Long-Term Financing Tips for PPP Borrowers

Part of the government’s COVID-19 stimulus package is the Paycheck Protection Program (PPP) which is a loan designed to provide a direct incentive for small businesses to keep their workers …More

Once Out of the Coronavirus Crisis, Banks Will Tighten Up On Lending

As the recession deepens, and we get past the government-backed SBA lending program, banks will tighten up on lending; they always do during a recession. So if you own a …More

How Borrowers Are Affected By the Difference in Factoring Vs. Asset Based Lending

There is a difference between factoring and asset based lending and that difference can matter dramatically to the borrower. The following are the main ways in which typical factoring and …More

President’s Message (March 2020)

The heart of our business is the relationships we have with our referral sources – with you. While social distancing has necessitated that our Client Development Officers cancel and not …More

Top 5 Criteria To Choose a Lender

If you’re asked to exit your bank and move to an asset based lender, how do you know which asset based lender is right for your business? Just as lenders …More

Tips For Commercial Bankers To Mitigate Portfolio Risk

The tech bubble in 2000/2001 and the housing bubble in 2008 started those recessions. Who would have imagined that a virus could be the catalyst for the next recession; yet …More

The Benefits of Asset Based Lending in Terms of Imposing Forced Discipline

One thing former borrowers tell us is that while they may have resisted tight control reporting initially, they learned it imposed a discipline (a form of which) they continued when …More

Audits: Trust But Verify

Audits are an important part of any lender’s ongoing due diligence the main reason being that they verify how a business is doing and if the business is in compliance …More

A/R Turn

As an asset based lender, the biggest, single statistic we look at relative to an accounts receivable (A/R) loan is how the business’ customers are paying their invoices. That’s what …More

President’s Message (January 2020)

As I usually start my Letter with a recap of the prior year, there’s no reason to change course this year, so let’s take a look at 2019:

New business activity …More

Top 3 Reasons for Choosing Celtic Capital

We’re often asked why prospective clients (and referral sources) choose Celtic Capital over other asset based lenders. Here are a few of the reasons we know are of greatest importance …More

Lenders, Borrowers and Covenants

There are three kinds of covenants:

Affirmative (the borrower says, “I will do… this or that”)
Negative (the borrower says, “I won’t do… this or that”)
Financial

Most lenders impose financial covenants as a …More

When a Bank Hangs In with a Marginal Client, It May End Up Hanging Itself

Generally, when companies struggle with declining sales or increased losses, unless management clearly solves the underlying issue(s) and the business has turned the corner, problems will continue to mount. Vendors …More

Personal Guarantee vs. Validity Indemnification and Why Do Lenders Request Them?

With a personal guarantee, the lender can go after the signer for any loss, anytime, for any reason – not necessarily because of any fraudulent activity. If the collateral isn’t …More

Equipment-Only Loans at Celtic Capital

We get many questions about our Equipment-Only Lending Program so we asked Mark Hafner, President and CEO of Celtic Capital, a series of questions to clarify the lending parameters:

When will …More