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Tuesday, Nov 28, 2023

Small Business Lender Gets Its Own Line of Credit

Calabasas alternative lender Fast A/R Funding has received a line of credit from a Utah bank that will go toward future growth of the company. The financial assistance firm is adding to its sales staff as word spreads of what Fast A/R can offer small businesses in terms of loans collateralized by future invoice payments. “We are generating five to 10 inquiries a day for possible new clients,” said Chief Executive Matt Begley. “As the business scales, we are expanding the sales force.” Begley would not disclose the amount of the line of credit the company received from TAB Bank of Ogden, Utah. Fast A/R uses a factoring model, a loan method that has been used for decades in the apparel industry and which Fast A/R has expanded into other retail markets. Factoring works this way: A company sells $50,000 worth of product to a large retail chain. Rather than waiting 45 days to 60 days for payment from the retailer, the company gives the invoices to Fast A/R and receives a loan for 80 to 85 percent of the invoice amount. Eventually the retailer pays the $50,000 to Fast A/R, which subtracts the original loan amount and its fee and then gives the balance to the client company. Fast A/R’s fee varies based on the size of the loan and how long it takes an invoice to be paid, Begley said. While there are other factoring houses, Fast A/R separates itself from the pack and is able to go national by taking a paper intensive process and moving it all online. “We created software that makes the whole process digital,” Begley said. “The application, the invoices, getting advances is done via the web.” As Fast A/R grows, the company’s strategy is to stay focused on small business clients. A typical client has annual revenue ranging from $500,000 to $5 million, Begley said, adding that they come from the technology, engineering services, consulting and food industries. “There are bunches of different business that have not used factoring for whatever reasons,” he added. Mike Katz, owner of Smart Planet, a Canoga Park manufacturer of kitchenware and utensils, uses Fast A/R for the fast turnaround on the loans. The interest rate is more expensive than a traditional bank loan but the benefit is receiving money in two to three days rather than weeks or months, Katz said. “The risk is on their end counting on that you have made the sale,” Katz said. What Katz also found attractive about Fast A/R’s model is that Smart Planet does not have to use every invoice for a loan. The company’s sales tend to be seasonal with some months doing better than others, Katz said. “They allowed us to pick and choose what we ran through them and some businesses do not do it that way,” Katz said. Deleting Debit Cards First California Bank is getting out of the debit card business as it does not fit with the business plan of its new owner, PacWest Bancorp. The board of directors at the Westlake Village institution approved last month winding down its electronic payment services division by the end of the year at a cost of about $2.4 million. The bank’s entry into providing prepaid debit cards was short lived. In 2011, First California completed its acquisition of the Electronic Banking Solutions division of Palm Desert National Bank for an undisclosed amount. At the time the acquisition was announced First California Chief Executive C.G. Kum said that prepaid debit cards would bring in a new revenue stream for the bank and complemented its growth strategy. But that business is not one that PacWest, which is buying First California, wants to continue. “PacWest concluded that the EPS division was not suited to PacWest’s commercial banking business model and PacWest would proceed to exit the EPS division upon the completion of the merger,” the bank stated in a filing with the Securities and Exchange Commission. PacWest is acquiring First California in a deal valued at $231 million. Banker Honored Anne Williams, chief operating officer and chief credit officer at California United Bank, was honored by the San Fernando Valley Financial Development Corp. at its annual award reception. Williams was recognized for her support of the organization and to small business in Southern California. Williams is one of a kind, said Roberto Barragan, president of the SFV-FDC. “We are so fortunate that someone with so much talent, wisdom and generosity works right here in the Valley,” Barragan said in a prepared statement. “She has truly made a difference to our local economy with her unending devotion to assisting small businesses.” The reception took place Feb. 21 at Panzanella Ristorante in Sherman Oaks. The Valley Financial Development Corp. is a non-profit formed by the Valley Economic Development Corp. to provide SBA 504 loans and loan guarantees to commercial banks through the California Small Business Loan Guarantee Program. Staff Reporter Mark R. Madler can be reached at (818) 316-3126 or mmadler@sfvbj.com

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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