Liquid Capital of Arizona is part of an international finance company. President Joel Gottesman explains that Liquid Capital provides alternative finance for small- and mid-sized businesses. However, it also offers services for larger, well-established companies.
One such service is asset-based lending. This service provides loans up to $10 million based on a client’s levels of receivables, inventory, and equipment. Gottesman suggests two situations where this service would fill a need. One would involve a high-growth company where bank financing would not suffice for a business’s working capital needs. The second situation would be where a company has run into some difficulties and no longer meets a bank’s underwriting standards. Liquid Capital can set up an asset-based lending facility for a year or two until the company gets back into a condition that will satisfy a bank’s underwriting standards.
Gottesman also points to Liquid Capital’s inventory finance program, a unique financial product it has developed for well-established companies. This program is for companies that already have a bank line of credit. Liquid Capital’s program operates in cooperation with the bank. Liquid Capital will fund up to 100% of a company’s inventory needs. Banks like the program because Liquid Capital does not ask banks to subordinate their security interest in inventories.
Gottesman explains that Liquid Capital will purchase whatever a client needs and pay cash to the vendors. If there is a cash discount, Liquid Capital passes that along for the benefit of the client. Liquid Capital then sells the inventory to the client, offering up to ninety days to pay. That gives the client time to complete production of goods, complete a sale, and create a receivable. The bank can then step in for the client and pay Liquid Capital for the inventory.
Gottesman says that the program “is backstopped by the Liquid Capital credit insurance policy.” Liquid Capital insures the client’s obligation to pay for the inventory. That enables Liquid Capital to refrain from asking banks to subordinate their security interests in inventory items.
There are also some situations where Liquid Capital can work side by side with a bank’s existing line of credit. One such situation involves export finance, where some of the company’s sales are to foreign customers, but the client is not given credit for those sales under the client’s bank line.
Another similar situation involves where a client has a high concentration of sales toone customer and the client’s bank does not want to fund those sales. Liquid Capital can step in an fund only the disallowed receivables.