SMOKY MOUNTAIN FINANCE, INC.
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| SMOKY MOUNTAIN FINANCE 3219 E. Lamar Alexander Suite #2 MARYVILLE, TN 37804 877.676.6599 888.676.6599 FAX 865.441.2373 AFTER HOURS |
ASSET-BASED FINANCING
Asset-based financing is unlike traditional bank loans. Banks can only lend under strict balance sheet, income statements ratios
and trend percentages. This is due to restrictions dictated by Federal and State government regulators. Asset-based financing
focuses on the collateral, management, future outlook and other resources available to the company. It provides immediate
access to cash that has been previously tied up in non-liquid assets. This type of financing can provide an overall credit facility or a
single line of credit.
COMMERCIAL REAL ESTATE
Innovative financing alternatives for customers that are not well served by traditional banks. Featuring competitive pricing, long
terms and high loan-to-values. Transactions involving out of favor property types, turnaround properties, and odd property types will
be considered.
Property Types:
DEBT RESTRUCTURING
These programs can range from refinancing one piece of equipment to “full facility” financing encompassing revolving lines,
inventory and term loans. Restructuring can allow companies to raise capital by leveraging assets which they already own. This is
especially useful for businesses seeking to refinance existing bank or corporate debt.
The benefits realized include increased working capital through the reduction of debt service and increased cash flow. In
situations where the company’s assets value exceed the remaining debt it is possible to raise additional cash. Many companies
can benefit from this type of transaction. Debt restructuring can be used to finance growth, restructure troubled companies or
provide balance sheet enhancement to healthy cash rich companies. To accomplish the goals of the client company, structures
such as off-balance sheet financing and tax-oriented leases may be utilized.
FACTORING
Factoring is the preferred method of working capital financing for companies that cannot afford to have cash tied up in receivables
for more than 30 days. Factoring is typically used when a company cannot qualify for a more traditional type of financing as in the
case of start ups, turn-a-rounds, and companies with little net worth. Because factoring is based on the strength of the receivables
rather than the company, it is ideal in these situations. Factoring eliminates the time and expense of collecting receivables.
Factoring differs from traditional accounts receivable financing in that the lender (factor) actually purchases the invoices directly
from the company on either a recourse or non-recourse basis. After the sale, the receivables, balances are carried on the factor's
balance sheet since title has passed. Because the factor then owns the receivables, it generally provides all the required credit,
collection, and accounting services necessary to collect the receivables. The important difference between factoring and traditional
accounts receivable financing is ownership. In factoring, the receivables are purchased and owned by the factor. In a traditional
accounts receivable lending arrangements, accounts receivable are pledged to the lender as security for the loan, but the
borrower retains ownership and complete control of the receivables and the value of the receivables remains on the borrower's
financial statement.
REVOLVING LINES
Revolving lines of credit are secured by the borrower's receivables and/or inventory. Typically, this type of financing is used to
increase cash flow and working capital. Because the borrower's customers are generally not notified of the assignment of their
accounts to the lender, the borrower continues to service its receivables. The borrowing arrangement is usually transparent to the
borrower's customers. Advance rates for lines of credit secured by accounts receivable depend on credit worthiness, and the
amount of dilution (returns, uncollectible, etc.) that the borrowers company experiences, but typically range from 60% to 85% of the
outstanding accounts receivable. Advance rates for lines of credit secured by inventory depend on the future orderly liquidation
value of your inventory and the level of inventory relative to the amount of your accounts receivable outstanding, but typically range
from 30% to 65% of the cost of inventory. Financing rates are based on a borrower's financial profile and market conditions
RE-FINANCING
Refinancing helps you uncover hidden equity in your assets. Refinancing provides a cash infusion by unlocking the equity a
business has in their machinery and equipment, and converting that equity into cash. These funds can be used for varied
purposes including working capital. Also consolidation of existing equipment loans into one transaction with one monthly
payment. These funds can also be used to buy back capital stock or to buy out a partner. Refinancing can help you improve cash
flow and lower financing costs. In addition, the current equipment value may exceed your remaining debt, allowing you to increase
the amount you borrow. Companies use term loans when ownership of the asset is an important consideration. Other companies
may turn to a sale-leaseback arrangement to accomplish these same types of goals but with the added benefits of a lease. These
benefits can include substantial tax savings, improved-liquidity, working capital ratios, return on capital and return on assets.
Refinancing to Replace Restrictive Lenders
There are situations when a company is poised for growth and is held back by a reluctant financial partner; most often, but not
exclusively, a conservative bank unwilling to bear the risks of growth. Banks are often in the position of curbing growth if only
because they generally do not price their loans to account for the risks associated with change. This occurs particularly where the
company will require both additional senior debt from the institution in question as well as junior capital. This complicates the
company's balance sheet and introduces a new party into the lending relationship. As a result, the bank may elect to exit the loan.
The most important insight an entrepreneur can take into a refinancing situation is the fact that the same amount of senior debt
can look very different depending on the other elements of the balance sheet.
TERM LOAN
Term Loans provide debt financing for an extended period of time, typically between 1 to 7 years. These types of loans can be
used to purchase equipment, vehicles, finance acquisitions or expand current facilities. Typically Term Loans are secured through
fixed assets such as machinery, plant and equipment. On the borrower’s financial statement, the portion of a Term Loan maturing
within one year from the date of the statement is shown as a current liability and the balance as long-term debt. Companies use
term loans when ownership of the asset is an important consideration.
As an alternative to a Term Loan, operating and finance lease arrangements can be structured in order to finance machinery and
equipment. Leasing offers the possibility of substantial tax saving, accelerated depreciation, 100% tax write off of payments,
avoiding AMT (Alternative Minimum Tax), keeping debt off the balance-sheet, improving liquidity, working capital ratios, return on
capital and on assets.
Term Loans are most often granted as part of a total financing package that would include a line of credit.
Asset-based financing is unlike traditional bank loans. Banks can only lend under strict balance sheet, income statements ratios
and trend percentages. This is due to restrictions dictated by Federal and State government regulators. Asset-based financing
focuses on the collateral, management, future outlook and other resources available to the company. It provides immediate
access to cash that has been previously tied up in non-liquid assets. This type of financing can provide an overall credit facility or a
single line of credit.
- Asset based loans are typically secured by the following types of collateral:
- Accounts Receivable
- Inventories
- Machinery and Equipment
- Real Estate
- Certain Intangibles
COMMERCIAL REAL ESTATE
Innovative financing alternatives for customers that are not well served by traditional banks. Featuring competitive pricing, long
terms and high loan-to-values. Transactions involving out of favor property types, turnaround properties, and odd property types will
be considered.
Property Types:
- Retail
- Mixed-Use
- Sub-Division & Residential Development
- Commercial & Industrial
DEBT RESTRUCTURING
These programs can range from refinancing one piece of equipment to “full facility” financing encompassing revolving lines,
inventory and term loans. Restructuring can allow companies to raise capital by leveraging assets which they already own. This is
especially useful for businesses seeking to refinance existing bank or corporate debt.
The benefits realized include increased working capital through the reduction of debt service and increased cash flow. In
situations where the company’s assets value exceed the remaining debt it is possible to raise additional cash. Many companies
can benefit from this type of transaction. Debt restructuring can be used to finance growth, restructure troubled companies or
provide balance sheet enhancement to healthy cash rich companies. To accomplish the goals of the client company, structures
such as off-balance sheet financing and tax-oriented leases may be utilized.
FACTORING
Factoring is the preferred method of working capital financing for companies that cannot afford to have cash tied up in receivables
for more than 30 days. Factoring is typically used when a company cannot qualify for a more traditional type of financing as in the
case of start ups, turn-a-rounds, and companies with little net worth. Because factoring is based on the strength of the receivables
rather than the company, it is ideal in these situations. Factoring eliminates the time and expense of collecting receivables.
Factoring differs from traditional accounts receivable financing in that the lender (factor) actually purchases the invoices directly
from the company on either a recourse or non-recourse basis. After the sale, the receivables, balances are carried on the factor's
balance sheet since title has passed. Because the factor then owns the receivables, it generally provides all the required credit,
collection, and accounting services necessary to collect the receivables. The important difference between factoring and traditional
accounts receivable financing is ownership. In factoring, the receivables are purchased and owned by the factor. In a traditional
accounts receivable lending arrangements, accounts receivable are pledged to the lender as security for the loan, but the
borrower retains ownership and complete control of the receivables and the value of the receivables remains on the borrower's
financial statement.
REVOLVING LINES
Revolving lines of credit are secured by the borrower's receivables and/or inventory. Typically, this type of financing is used to
increase cash flow and working capital. Because the borrower's customers are generally not notified of the assignment of their
accounts to the lender, the borrower continues to service its receivables. The borrowing arrangement is usually transparent to the
borrower's customers. Advance rates for lines of credit secured by accounts receivable depend on credit worthiness, and the
amount of dilution (returns, uncollectible, etc.) that the borrowers company experiences, but typically range from 60% to 85% of the
outstanding accounts receivable. Advance rates for lines of credit secured by inventory depend on the future orderly liquidation
value of your inventory and the level of inventory relative to the amount of your accounts receivable outstanding, but typically range
from 30% to 65% of the cost of inventory. Financing rates are based on a borrower's financial profile and market conditions
RE-FINANCING
Refinancing helps you uncover hidden equity in your assets. Refinancing provides a cash infusion by unlocking the equity a
business has in their machinery and equipment, and converting that equity into cash. These funds can be used for varied
purposes including working capital. Also consolidation of existing equipment loans into one transaction with one monthly
payment. These funds can also be used to buy back capital stock or to buy out a partner. Refinancing can help you improve cash
flow and lower financing costs. In addition, the current equipment value may exceed your remaining debt, allowing you to increase
the amount you borrow. Companies use term loans when ownership of the asset is an important consideration. Other companies
may turn to a sale-leaseback arrangement to accomplish these same types of goals but with the added benefits of a lease. These
benefits can include substantial tax savings, improved-liquidity, working capital ratios, return on capital and return on assets.
Refinancing to Replace Restrictive Lenders
There are situations when a company is poised for growth and is held back by a reluctant financial partner; most often, but not
exclusively, a conservative bank unwilling to bear the risks of growth. Banks are often in the position of curbing growth if only
because they generally do not price their loans to account for the risks associated with change. This occurs particularly where the
company will require both additional senior debt from the institution in question as well as junior capital. This complicates the
company's balance sheet and introduces a new party into the lending relationship. As a result, the bank may elect to exit the loan.
The most important insight an entrepreneur can take into a refinancing situation is the fact that the same amount of senior debt
can look very different depending on the other elements of the balance sheet.
TERM LOAN
Term Loans provide debt financing for an extended period of time, typically between 1 to 7 years. These types of loans can be
used to purchase equipment, vehicles, finance acquisitions or expand current facilities. Typically Term Loans are secured through
fixed assets such as machinery, plant and equipment. On the borrower’s financial statement, the portion of a Term Loan maturing
within one year from the date of the statement is shown as a current liability and the balance as long-term debt. Companies use
term loans when ownership of the asset is an important consideration.
As an alternative to a Term Loan, operating and finance lease arrangements can be structured in order to finance machinery and
equipment. Leasing offers the possibility of substantial tax saving, accelerated depreciation, 100% tax write off of payments,
avoiding AMT (Alternative Minimum Tax), keeping debt off the balance-sheet, improving liquidity, working capital ratios, return on
capital and on assets.
Term Loans are most often granted as part of a total financing package that would include a line of credit.
FINANCIAL PRODUCTS OFFERED