Apple Capital Group, Inc.

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1 COMMERCIAL FINANCE Commercial finance typical revolves around what are considered the assets of your business and are often called "asset based loans". The assets of your business are things such as your outstanding account receivables, open purchase orders, inventory, import/export contracts, large equipment, reoccurring credit card billings and other hard assets such as bonds or certificates of deposits, etc. Commercial financing types are loans like invoice factoring, purchase order advances, credit card receipt advances, secured working capital credit lines, inventory flooring financing, franchise financing, and import/export letters of credit. To get approved for commercial financing it is typically much more about your assets than it is about you or your business. For example, a commercial finance lender will look much harder at the credit worthiness of your client for that invoice receivable than they will at you. For that purchase order you want to finance, a commercial finance loan will require that the company issuing the purchase order has good credit. If a commercial finance lender is going to approve your business for a secured line of credit they will want to know that the asset's liquidation value is enough to pay back the loan. So if they have to sell your crane or backhoe, they want to be sure they can get paid back. A great way to get a dollar for dollar secured business loan is to secure it with a certificate of deposit or CD. With this method you can borrow money from friends or family, or even use your own savings to secure a business loan that then makes your business much more real to other lenders because they see the credit line on your business credit reports, but they don't see that it is secured. Capital Type Account Receivable Factoring Asset Based Loan Bankruptcy Reorganization Financing Expansion Financing Import and Export Inventory Loan Purchase Order Financing Secured Credit Line Merchant Account Advance Capital Type Definition Account receivable factoring serves as collateral for short term working capital loans that you can obtain fast and cost effectively. Seeking to convert a company assets into working capital. Giving a security in an asset(s) in exchange for cash. Financing to reorganize in company in a turnaround. Typically secured by assets; equipment, inventory, A/R, PO's (purchase order), etc. Growth has outpaced existing business. Loan for existing demand. Key here is existing demand, not projected. Loans to promote the shipping or receiving of products or materials. Based on existing market, demand or orders. A loan typically made as part of a relationship where the lender will also provide retail financing for the product. Loans on the written order to purchase goods at a stipulated price with an agreed to delivery date. Credit rating of order is key. A pre-arranged amount of credit based upon existing inventory, A/R and PO's (purchase order). Up to a $150,000 advance against regular occurring monthly merchant credit receipts.

2 I. ACCOUNTS RECEIVABLE FACTORING Apple Capital Group, Inc. Account receivable factoring is where A/R and invoices are your most valuable asset. "Factoring" is simply a way to finance your sales. You sell your open invoices at a small discount and you get the cash now. This cash can be used for almost any business expense such as paying for utility expenses, salaries, buying new equipment, or even paying for a new marketing campaign. There are several benefits to account receivable factoring which are outlined below: You don't give up equity as with investment capital or new partners. You can take advantage of supplier early payment and volume discounts. You have the ability to make volume purchases from suppliers. No more offering early payment discounts to customers. Elimination of your bad debt. Factoring is non-recourse. No additional debt, factoring is not a loan. (off balance sheet) Remember, the proceeds from account receivable factoring are not a loan. You are literally selling your open invoices for their face value less a small discount. Therefore, the creditworthiness of your customers is a critical factor in determining whether this will work for your business or not. If your customers do not pay on time, then the company which purchases the accounts receivables from you will not do business with you again, and you will not get the quick financing boost when your business needs it. What is its function? - Asset based loan financing provides short term restructuring of a companies financial situation to facilitate maximum cash flow. It provides a period of recovery time and a financial operating environment where a company can demonstrate how it could perform with a long-term loan in place. This allows a company to demonstrate it is worthy of long term financing. An asset based loan does this by allowing a company to pledge its assets as collateral for a loan. The company still owns its assets, but they can easily be seized if payment are not made to the financial institution issuing the loan. It is very important to make loan payments on time. What are the advantages? - When business opportunities appear in the market, access to conventional financing may not be executed in time to take advantage of the situation. There may also be the need to "stretch" the resources available to accomplish a company s objectives and conventional resources will not handle it. This is where an asset based loan becomes the mechanism of opportunity! What does an asset based loan look like? - Qualifying assets include: real property, A/R, equipment, finished inventory, etc. Some loans are based on a specific asset, while others function as a line of credit secured across a combination of assets. II. BANKRUPTCY REORGANIZATION FINANCING Bankruptcy reorganization financing provides potential turnaround financing for your business. Bankruptcy reorganization financing is required for businesses that are facing difficult bankruptcy situations. Often times a management or employee buyout will be the main part of the reorganization. This strategy will save jobs and also give employees the opportunity to work together to turn the company in the right direction. Here is a good example of bankruptcy reorganization financing at work. If company ABC is facing bankruptcy and potential liquidation they will need to restructure the organization. They would

3 contact a financial company like ones we have available in our free business capital search engine, and work with them to restructure the company. The employee unions would work to raise a working capital loan to fund the transaction of the company from the owners who are facing the pending doom of the bankruptcy. All of the employees would vote to agree on taking a salary reduction in exchange for becoming a part owner of the new company. The reduced wages would increase cash flow. The employees benefit because they have a potential of actually making more money than before because they will all become equal owners and could share 80 percent of the profits for example. The additional 20 percent would go towards the company that helped fun the transaction. III. EXPANSION FINANCING Expansion financing is capital for business growth. Expansion financing is used for companies that are in a position where they need to expand, or want to expand and they need the extra capital to do so. If the market conditions are right, it can be a great move for a company to expand. Some businesses find themselves in need of expansion financing as soon as possible because of how rapidly their business is growing. Flexible term financing is typically available for a variety of business expenses. These include leasehold improvements, hiring additional staff, new and used equipment, construction costs, marketing costs, real estate acquisition, etc. In order for a business to get approved for expansion financing they should be focused and have a detailed plan in place for the lender to see. This should be a complete business plan that captures the attention of the lender right off with a well written executive summary at the beginning. This is the first thing the lender will see, and will determine whether or not the rest of your loan gets considered. Additional information that should be included is the names and brief resumes of each of the company's key staff including Owner, President, Management, etc. On top of that information lenders will also consider the strategic position of the company or the information on what the market can offer. Also be sure to include in the plan the exact amount of funding needed, and exactly how that money will be allocated and spent. These are just a few of the factors that lenders think are important. For a more in depth overview we recommend you consider our Business Finance Coach which shows you step-by-step how to obtain business capital. IV. IMPORT AND EXPORT FINANCING Import and export financing Allowing business to go on globally. Import and export financing exists to enable business to take place overseas. Import and export financing provides importers who have orders from customers in the United States, or foreign customers backed by a letter of credit, with the necessary financial backing to provide their overseas supplier with a letter of credit to guarantee payment of goods. There are many reasons for a business to engage in this sort of financing. One big reason is that the financing can be arranged to cover 100% of the transaction. This provides the importer with

4 sufficient financial strength to sell larger orders than they would be able to on their own financial strength. Depending on the strength of the buyer, this may be done on open account with the domestic buyer, allowing the buyer to increase their purchasing power. The whole process works because the importer will supply you with basic information on the import company and their customers. You then evaluate the credit worthiness of the customers. For each of the approved customers, the importer will supply us with copies of purchase orders that are to be filled. We will then arrange a letter of credit to be issued to the suppliers bank with the supplier as the beneficiary. V. INVENTORY LOAN FINANCING Inventory loan use your inventory to secure a loan. Inventory loan financing (also known as "Flooring") is the leveraging of inventory using the value of the financed equipment or stock as collateral for the loan. Lenders want to make sure their loans are secure, so this method will improve the chances of getting financed drastically. Inventory loan financing is a method commonly used when a distributor or reseller needs additional credit and payment terms longer than 30 days in order to maintain a complete stock of inventory for immediate customer availability. Lenders and savvy business people realize that running out of inventory will do nothing, but drive customers away from a business. That is why more and more lenders are willing to allow a business to use their current stock of inventory as collateral for future loans. A benefit of using this sort of loan is the increase credit capacity based on security in financed inventory/equipment. It also allows distributors and resellers to stock inventory with extended payment terms. Working capital position for the business is also increased. Another extremely important benefit is that it does not count against the customer's credit line. VI. PURCHASE ORDER FINANCING Purchase order financing offers quick cash flow reserves. Purchase order financing is an excellent method for a business to obtain quick capital. It is a great solution for when cash flow reserves are low. The problem happens with many businesses because the suppliers want you to pay upfront with a C.O.D., but your customers want to pay you on net 30 or net 60 day terms. Cash flow is a common problem for manufacturing companies especially because while the goods are in transit, the invoices are not paid by the buyers. Purchase order financing frees up your cash for critical business expenses. Another benefit is that it does not show up as debt for your business if you get this sort of financing. This makes it possible to not only use extra cash to get discounts on purchases, but it also allows your business to get approved for more financing. The steps to being ready for purchase order financing are really quite simple. First you need to get a purchase order from your customer, secondly you need to find a reliable supplier for your products, and lastly place the order with that supplier. This will get you on the track to getting purchase order financing. VII. SECURED CREDIT LINE Secured credit line provides financial flexibility for your business

5 Secured credit line financing is a flexible form of working capital that all businesses should consider. It is critical for cash flow management because it provides access to a line of credit that can be used anytime a need arises. This means that your regular business operations will not have to stop while you wait for the cash flow to come in that you need to pay employees, pay for inventory, pay for advertising, and more. Timing is essential for a business. You want to make sure you can make all of your required payments on time to minimize disaster. A secured credit line gives your business security that funds are available if times aren t good for a short period of time for your business. Sales are always fluctuating, especially for new businesses, so it is important that you have a backup plan so your business doesn t fail. A secured credit line functions just like a credit card in that you are given a credit limit and you can make purchases on that line of credit. You are only charged interest on what your business actually uses instead of on the whole line of credit like a loan. You can also make small or large payments on your line of credit each month, instead of being locked into a monthly rate much like a standard loan. This again gives you flexibility to either pay the minimum or pay the balance in full each month. Another thing to keep in mind is that once you are approved for a credit line you will not have to reapply. This eliminates any hassle involve with getting approved for loans, and again gives you the peace of mind that you always have this line of credit to fall back on. VIII. MERCHANT CREDIT CARD ACCOUNT ADVANCES Merchant account advance is a relatively new way for merchants to access cash. Merchant account advances are a great way for business owners to get the cash they need quickly. Instead of having to worry about large monthly payments, the loan is repaid from a small percentage of each credit card sale the business makes. How? Get an advance on your Visa and MasterCard receipts. What is typically needed to qualify? Your business must accept credit cards as a form of payment You need to be processing a minimum of $2,500 dollars a month You can qualify even with poor personal or business credit How does the program work? You are advanced up to $100,000 based on your current sales receipts A small percentage is deducted from your on going Visa/MC receipts There are no fixed payments and no fixed term time frame

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