Frequently Asked Questions (and Answers)
Finding the right lender can be a complicated and cumbersome process. Below are some questions we frequently encounter that should help you navigate this important financial decision.
How will I know which Accord lending program is right for my business?
Every business situation is unique; you can rely on our decades of experience to craft a solution that works best for you. Give us a call — we’re here to help.
What are the loan amounts you will offer?
Depending on the services required, Accord Financial provides funding from $50,000 - $20,000,000. However, if you require amounts outside of this range please let us know, we are continuously evaluating are parameters.
What type of collateral do you lend against?
We will finance accounts receivable, inventory, machinery and equipment. In addition, our lender finance team serves consumer and business lenders.
How long does it take to set up an account with Accord?
It may take anywhere from 10 to 21 days to set up a factoring line less than $2 million. A full asset-based loan facility will normally take between four and eight weeks, depending on the timeliness, quality and completeness of the financial information.
Accord has been around longer than most other non-bank lenders. Why is that important to me?
Because Accord has been financing businesses since 1978, we have unique insight into opportunities and challenges across a wide range of industries. This means we can quickly understand each client’s needs and offer solutions where other lenders can’t. And you can be confident we’ll be here as long as you need us.
What differentiates Accord from other non-bank lenders?
Our people. In addition to the unparalleled experience of Accord’s senior team, our client service teams deliver exceptional service on a daily basis. Accord’s broad range of solutions and balance sheet means that as your financing needs evolve, we can offer flexible alternatives to keep your business growing.
Can I borrow from Accord if I already have bank financing?
Yes, several of Accord’s programs work well as an addition to bank financing. Equipment finance or leasing, as well as supply chain finance (AccordOctet) are separate from your bank line. An AccordAccess small business loan can temporarily bolster the financing you already have in place.
What are the chances my company will qualify for conventional financing at a later date?
Accord’s success is measured by our clients’ success. The objective of our financing is to give you the time and opportunity to achieve your objectives. The vast majority of our clients return to conventional financing, appreciative that we were there to help when they needed.
Why is Accord often more expensive than a bank?
There are many situations where other lenders are reluctant to offer financing. These can include start-ups, small businesses, high-growth companies, and companies in transition (such as acquisition, restructuring and turnaround situations). These cases often require extra effort to understand the situational risk and structure financing effectively.
How does asset-based lending differ from traditional bank financing?
Asset-based lending uses the value of the underlying collateral and then takes into account the borrower’s financial condition, management and the overall company circumstances. Traditional bank financing is based on the borrower’s equity and often requires more stringent financial requirements and loan covenants from the borrower. The flexibility and versatility of asset-based lending works well for companies with special needs such as seasonal sales patterns or temporary challenges. Asset-based lending is a reliable source of capital for businesses unable to qualify for traditional bank financing.
Who can benefit from an asset-based loan from Accord Financial?
An asset-based loan can benefit businesses of all sizes that have less than perfect earnings history, a leveraged balance sheet and/or are in transition due to acquisition, turnaround or other similar situation. Asset-based loans are more focused on the value of a businesses assets than on its earnings track record and strength of the balance sheet. Because off this, they generally have fewer financial covenant restrictions and provide greater flexibility.
We provide timely and efficient financing solutions for companies from startups to established businesses seeking additional funds for expansion, acquisitions or turnarounds. Accord serves clients in a variety of sectors across North America, including manufacturing, wholesaling, distribution, service companies, staffing, retail as well as other lenders. Industries we finance include food & beverage, furniture, apparel & textiles, sporting goods, industrial manufacturing, home improvement, furniture as well as many others. In short, if you have a strong management team and good quality assets, your company is an excellent candidate for asset-based lending.
How does asset-based lending generate cash to support a company’s activities?
By financing the value of the accounts receivable, inventory, machinery and equipment, companies have access to increased liquidity which they can use to pay expenses, buy inventory and run their business.
What are the most frequent uses of asset-based loans?
Asset-based loans can benefit businesses of all sizes and often used to finance growth, turnarounds and acquisitions. For companies that are in acquisition mode, an asset-based loan can utilize the assets of the target company as part of the acquisition financing. For companies restructuring their operations, an asset-based loan can utilize the company’s existing assets to provide needed cash liquidity. Because of the flexibility provided and focus on the asset value over the earnings and balance sheet, asset-based loans are ideal for companies in transition.
What is accounts receivable factoring?
Factoring is a legal mechanism whereby the financing company purchases accounts receivable at a very small discount. In day-to-day application, a factoring facility operates just like a revolving loan backed by accounts receivable as collateral. Advances of up to 90% of the face value of the invoice are sent to the client usually within 24 hours of an order, while allowing the customer up to 90 days to pay. This enables a company to get cash fast to reinvest in the business rather than waiting for its customers to pay. When the customer pays, that payment less the initial advance and applicable fees is sent to you. This form of financing is utilized when the borrower has a stressed financial condition and allows the finance company to focus on the credit worthiness of the customer debtor instead.
Once factoring starts, will the client continue to invoice customers as usual?
Yes. However, the payment address is changed to remit directly to a lockbox controlled by Accord. At the beginning of the relationship the borrower’s customers’ will be sent a notice on the client’s letterhead, informing him that the accounts are now factored and where to send the payment.
Who does the collections, and how do I keep track of invoices and payments?
Collections are coordinated between Accord and your accounting staff. In some cases, the finance company will perform all the collections on your behalf. In either case, the client has access to all the account activity 24/7 through our secure client portal and through daily interaction with our client services teams.
What if I don’t want my customers to know that I am factoring?
Certain companies qualify for non-notification factoring and/or asset-based accounts receivable revolving loans. Generally, these companies have stronger balance sheets, are operating profitably and have excellent systems. More frequent field examinations and more stringent qualifying criteria are part of granting this type of financing.
Although there is often a perceived negative connotation about receivables factoring by borrowers, it is a very common form of financing and most accounts payable departments are accustomed to having their customers utilize this form of financing.
How much does factoring cost?
The costs of factoring are similar to other types of asset-based financing.
Will Accord finance my start-up business?
In many cases Accord can help. If your company has started selling and has purchase orders to demonstrate a demand for your products or services, you may qualify for financing. We usually look for a management team with experience in the same industry, but with a previous or different company. If you had success in the past, we’re happy to help you start up again.
What is Retail Inventory Financing?
Retail Inventory financing is a form of asset-based lending that allows retailers to use their inventory as collateral to obtain a revolving financing facility. This financing is based on the appraised value of the inventory and frees up cash to support growth.
How can asset-based lending benefit my retail business?
There are many advantages, including: providing the cash flow needed to keep shelves stocked with fresh merchandise, paying expenses during slow seasons.
How does Accord approve and close an AccordAccess small business loan so quickly?
Unlike a bank, we evaluate your small business based simply on the creditworthiness of the owners and a quick review of the business’ recent bank statements. And the fact that AccordAccess is unsecured means that documentation and funding can happen within 48 hours.
How do I qualify for an AccordAccess small business loan?
Qualification is simple:
- Have you been in business more than two years?
- Are your annual sales at least $100,000?
- Are there regular deposits into your business bank account?
- Do you have an average or better credit profile?
Why should I finance or lease my equipment
Financing your equipment with a lease or loan allows you to match your equipment payments to the revenue you earn with the equipment. As an added benefit, the lease payments are inflation-proof. This is a great way to optimize your cash flow.
Can I refinance equipment I already own?
Absolutely. Refinancing your existing equipment is an effective way to fund expansion, ongoing operations or other initiatives. This is a great way to unlock fresh working capital, boosting your ability to grow.
Is AccordOctet supply chain financing the same as factoring?
No, factoring accelerates payment of your receivables after you’ve delivered to customers, whereas supply chain finance provides you with a credit line to pay your suppliers. AccordOctet supply chain finance is usually used to finance supplies, like inventory or raw materials that go into your finished products.
What if I already get terms from my suppliers (I pay in 30-60 days)?
Great, you can use AccordOctet to pay more quickly and negotiate early payment discounts. And your repayment terms can stretch out to 120 days. With early payment discounts, the cost of 120 days of credit will be competitive with any other source of capital. And AccordOctet won’t interfere with your existing bank line.
What are the benefits of revolving line of credit?
By utilizing your working capital assets or existing portfolio of loans, you will be able obtain the capital required to grow your business.
What if I don’t have perfect credit?
As an experienced lender, Accord understands the ups and downs of the business cycle. One of the benefits of partnering with Accord is that through our procedures we have many success stories that have seen businesses graduate to bank financing.
What type of reporting do you require from finance companies?
The reporting we require is somewhat dependent upon the specific type of finance company. Typical reports would include portfolio composition details, new loans, payments received, delinquency, write off and other similar information. We also require access to the raw portfolio data to monitor activity. Lastly, we required an approved loan management system be utilized and available to Accord.
Does Accord’s A/R management service my entire book of business?
Typically yes, it helps simplify the collections process. Accord has worked with nearly every retailer in North America – remitting payments to Accord is considered normal-course in the industry.
Will outsourcing A/R management to Accord complicate my customer relationships?
Most companies value having a third-party like Accord handle their accounts receivable collections. By outsourcing A/R management to Accord, you can focus your customer relationships on more positive issues, like how to help your customers grow, and how you can grow along with them.