Kansas City-area factoring firms fill in gaps left by bank loans
by James Dornbrook, Reporter-Kansas City Business Journal
“What is getting done is creative financing and restructuring,” said Bruce Kessler, founder of Overland Park-based Kessler Capital Consulting. “It’s been keeping the economy afloat and going, and some of the most creative people in the business are right here doing it in Kansas City.”
Factoring firms like Kessler Capital provide customers with cash by buying their accounts receivable at a discount. Such deals aren’t reliant on the credit rating of the customer but on the likelihood that the customer’s clients will pay their bills.
Kessler said the sweet spot for his service is any kind of equipment loan, working capital credit needs or any deal that involves less-than-stellar credit that a bank isn’t going to be interested in.
Surprisingly, banks often reach out to factoring companies to discuss clients they just can’t help any more.
“If it’s a client that the bank has been working with for years, they really hate to say no, because the first thing that person will do is go down the street to a competitor and move accounts there,” said Kim Deveney, CEO of American Funding Solutions. “We work with the bank. The bank can’t give a line of credit but instead recommends factoring and gives the client our name. That works pretty well, because the client is happy and the bank keeps a customer.”
Kessler said he has closed several deals in the past few months. One was a hardwood floor company in central Missouri that suffered substantial losses the past few years but is rebounding and needed a larger credit line.
The company’s bank faced pressure from regulators and wanted out completely, but the company couldn’t find anyone to buy out all its loans and provide a larger credit line for a rate less than 20 percent.
Kessler found a capital source willing to buy out the loans and used factoring for the additional credit line for an overall rate of 11.5 percent.
Terry Christenberry, partner at Country Club Capital Advisors, said factoring can be a great option for companies coming back from a downturn or young companies that haven’t yet established a good credit rating.
“It’s a reasonable alternative,” Christenberry said. “It’s generally more expensive, so it’s not for everybody, but it does solve some problems for people.”
James Dornbrook reports about banking, financial services, manufacturing and sports business.
Kessler Capital Consulting specializes in growing companies in the following financial areas:
- MERGERS, ACQUISITIONS, RECAPITALIZATIONS, AND VALUATIONS
- Lines of credit via Asset Based Lending and Factoring of Receivables
- Equipment leasing for solid companies with a long history
- Mezzanine and Subordinated Debt
- Turnaround consulting
- Oil/Natural Gas production and Pipeline loans
It would be a privilege to serve your best interests !
Bruce Kessler, MBA/ChFc
KESSLER CAPITAL CONSULTING
11701 Wedd, Suite 4
Overland Park, KS 66210