Monday, August 03, 2015 8:33:48 AM
For the uninitiated, FACTORING is a financing method provided by commercial banks to small businesses with viable accounts receivables. Essentially the banker provides a loan to ALKM collateralized by their sales accounts receivables at a percentage discount to the book value of the receivables.
This gives the struggling small business managers the funds they need (without having to dilute ownership) on a month by month basis at a reasonable interest for the risk level they represent to the commercial bank, say prime + 5% or something like that. It's a WIN, WIN, WIN. Management wins because they get the working capital loan they need to manage the company's growth. The banker wins because he/she gets a new commercial loan on the books with the deposit accounts of a viable small business. Shareholder win because we get a growing investment value with NO MORE DILUTION.
Hope Mr. Eakle chooses this methodology to finance our collective futures together.
GLTA!
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