Opportunity in Private Credit
Yield in a Low-Interest Rate Environment
These days, investors have few options when it comes to generating yield from publically traded credit. However, economic growth, while measured, has been sufficient to keep default rates on privately placed corporate debt in check. Accordingly, investors are discovering the qualities inherent in this relatively undiscovered asset class, such as shorter duration and yield premiums more often in excess of those available from comparable public credit instruments.
Filling the Void
Meanwhile, tighter regulations have made it unfeasible and uneconomical for large financial institutions to lend to small- and medium-sized businesses – precisely the corporate segment that needs growth and expansionary capital the most. Such borrowers are increasingly turning to alternative lenders as a source of financing, which creates an attractive supply-demand dynamic between the companies that need capital and the investors that can provide it. Revenue Purchase Transactions, when properly vetted and constructed, offer risk-adjusted returns well in excess of those available to traditional credit investors
Understanding the Risk
Structured properly, Revenue Purchase Agreements can provide a much greater safe haven than is typically understood. For instance, our transactions typically carry a shorter term, higher rates, and non-traditional payback structures, such as daily and weekly repayment. These components mitigate risk and provide for higher yields than those associated with private debt and other assets, such as stocks, private equity or public bonds. For the portfolio owner, these characteristics can increase portfolio diversification and reduce volatility.
Merchant Cash Advance – Syndicate Partner Program
Yield in a Low-Interest Rate Environment
Banking as we know it is undergoing a paradigm shift. Fewer and fewer banks are serving the retail needs of consumers and small businesses. Peering into the future, it is easy to see that many of these banks will no longer be a resource for capital for small and medium-sized businesses. Merchant Cash Advance is the next generation financing product for small and medium-sized business owners. Analysis of the economic situation suggests there will be strong, growing demand for capital from these companies. This will result in a dynamic and expanding marketplace and a great opportunity for lenders. In exchange for providing funds, competitive potential returns are offered to lenders with their interest secured by the funding portfolio itself.
• Double-digit rates of return, well above average stock market performance.
• Low $50,000 minimum
• Great for self-directed IRA
• Syndicate Partner’s interest secured by a 12-month Memorandum of Indebtedness
• Lender’s interest is secured by the funding portfolio itself.
• 24/7 Online access to an account.
• Advances are spread across a diverse array to minimize risk exposure.
• Syndicate Partner portfolio performance and balances are validated quarterly by an external accounting firm.
How It Works:
Merchant or Business Owner contacts the Funder seeking working capital or a loan.
• Funder requests information for underwriting from the Business Owner, typically 1year of bank statements and tax statements. Since one of the main criteria is strong cash flow, it is important for the funder to carefully examine the companies bank statements.
• After receiving the necessary financials, the file is sent to the underwriting department. A thorough background, credit check, and bank verification is completed. If the data received is in line with the underwriting guidelines the funding is approved and offer is made based to the business owner.
• Example: Merchant is approved for a $100,000 Advance against the future revenue of the company. The term of the Advance is 100 days. Since the contract is in the form of a Revenue Purchase Agreement and not a loan, it is assigned a factor rate which is the fixed cost of money. The factor rate in this example is 1.30. Meaning that the Merchant would repay $130,000 over the 100 day period. The Advance would be repayed 1,300 per day and would be withdrawn electronically every day as a set percentage of the Merchants daily collections.
• The Merchant accepts the terms signs and returns the contract. The Monies are forwarded to the Merchant by ACH or Bank Wire.
• Advance amount is split between Syndicate Members on a first come basis.
In the particular case if there were 10 Syndicators with each syndicating $10,000, each would be repayed a gross amount of 13,000. It is recommended that each Syndicator syndicate in a minimum of 10 contracts as a means of risk management and diversification.
We have 24 years experience in investments
There’s a reason why more and more investors have turned to Revenue Buyers for solid Investment Opportunities