rainstar capital group alternative funding overview

Email: [email protected] Phone: 616-821-6535 rainstarcapitalgroup.com

ALTERNATIVE COMMERCIAL FUNDING OVERVIEW

“Our obligation is to serve entreprenuers in growing their real estate and business ventures by providing access to alternative funding. We welcome the oppourtunity to earn your business!”

CEO- Kurt Nederveld

mailto:[email protected]

Email: [email protected] Phone: 616-821-6535 Rainstarcapitalgroup.com

ALTERNATIVE COMMERCIAL FUNDING OVERVIEW

WHAT IS ALTERNATIVE COMMERCIAL FUNDING?

Alternative lending is a broad term used to describe the wide range of loan options

available to consumers and business owners outside of a traditional bank loan.

These alternative options are most commonly used when an individual or business

owner cannot obtain a traditional bank loan for any number of reasons. Alternative

lenders specialize in utilizing overlooked sources of collateral such as real estate or

even outstanding invoices to secure the loan. They are typically more flexible than

banks when it comes to repayment schedules and loan approval and often provide

cash much faster than their traditional banking counterparts. The alternative

lending industry is well-established and generally staffed by well-respected

members of the financial services community.

While alternative loans may sometimes have higher interest rates than traditional

bank loans, they fill the gap for small businesses everywhere, providing much

needed funding for cash-strapped businesses that have been unable to obtain a loan

or line of credit from traditional banks, thereby giving the business owner the

opportunity to invest back into the business, manage cash flow and continue to

operate for years to come. Any reputable alternative lender will speak with you at

length about the best loan program for your business.



TYPES OF ALTERNATIVE BUSINESS FUNDING

CASH FLOW ADVANCE

FACTORING OR ACCOUNTS RECEIVEABLES FINANCING

ASSET BASED LOANS

EQUIPMENT LEASING/FINANCING

SECURED AND UNSECURED LINES OF CREDIT

CROWD FUNDING

CASH FLOW ADVANCE

Cash Flow Advance, has many different names such as, Revenue Based Advance,

Merchant Cash Advance, Bank Statement Advance and ACH Advance.

The KEY word in each of these names is ADVANCE. A Cash Flow Advance IS

NOT a loan. A Cash Flow Advance is when a funder advances a merchant or

business money based on their historical revenue and the likelihood that that

merchant or business will continue to average the same amount of revenue in the

future.

Cash Flow Advances make up 90% of the funding that Rainstar Capital Group

facilitates. These advances are easy for a business to qualify for and the typical

turnaround time is 24-72 hours.

Years ago, Merchant Processing Companies offered their merchants a cash flow

advance that was called an MCA or a Merchant Cash Advance. With an MCA, a

funder analyzes the past 4 months of a merchant’s credit card processing

statements to determine how much of an advance the merchant qualifies for. The

amount a merchant pays back is a small daily percentage (9% to as high as 32%) of

that credit card revenue for a period of 3 to 18 months.

For example, Mary’s Flow Shop over the past 120 days (4 months) has an average

total monthly revenue of $25,000 per month, with $20,000 of that revenue being



credit card receivables, or sales that customers used their credit cards to pay with.

With other qualifying factors considered, a funder will advance up to 200% of the

average monthly credit card receivables. In this example, Mary’s Flower Shop was

offered $22,000 to be paid back over 9 months with a daily percentage of 15%. So

if Mary averages $20,000 per month in credit card revenue, it is safe to assume her

average daily revenue per month is around $1000.00 per day. (30 days per month,

minus 8 Saturdays & Sundays) If she averages $20,000 per month, that is divided

by 20 (Sat & Sun are not included) days to equal $1000.00.

Mary has agreed to allow the funder to take 15% of her daily credit card sales for 9

months as payback on the $22,000 that is advanced to her.

$1000.00 x 15%=$150.00

9 Months= 180 payments

180 x $170.00=$27,000

PLEASE NOTE:

Funders require daily debits as payback Monday through Friday, excluding

holidays.

In the Cash Flow Advance arena there are 20 payback days in a month. For

example:

3 month term means there are 60 payback days per month

4 month term means there are 80 payback days per month

5 month term means there are 100 payback days per month.



While MCA’s or Merchant Cash Advances were very popular some 10 or so years

ago, there has been a new kid on the block. This new kid is commonly called, ACH

or Bank Statement Advance.

Funders realized that not all merchants and/or businesses accepted credit cards. If

the banks said no, these businesses were often left out in the cold in the alternative

commercial funding arena. Realizing a new funding model, funders began offering

these businesses an advance based on their total monthly revenue, whether or not

that business accepted credit cards.

For example…. Joe’s Taxi Company had been in business for a couple of years

and he needed to make some expensive repairs to some of his cars, but banks said

no. Joe’s Taxi Company was pretty much an all cash business. Upon analyzing

Joes past 4 months business bank statements, it was determined he averaged

$33,000 per month in gross revenue. With all things considered, a funder will

advance a business anywhere from 40% to 85% of their average monthly revenue

for an ACH or Bank Statement Advance over a 3-18 month term. Joe was offered

$21,450 at a discount factor of 1.38 for 6 months.

Since this is not a loan, there are no interest rates. On ACH Advances, the

payback is calculated using a discount factor anywhere from 1.18 to 1.50 and

sometimes higher!

In Joe’s case, he has total payback of $29,601.00.

$21,450 x 1.38= $29,601

6 month term or 120 Days of payments

$29,601 divided by 120 days= $246.67

Joe’s account will be debited $246.67 daily Mon thru Friday for 6 months.



PLEASE NOTE:

Even though, good credit is not required to receive an advance, the personal

credit of the owner is part of the determining criteria of what discount factor

a merchant will get. The better the credit, the better discount factor a business

receives.

Example: Often credit scores 650+ can expect discount factors ranging from

1.18 to 1.28.

REVIEW

A Cash Flow Advance is not a loan, it is an advance based on the historical

revenue and the propensity of a business to continue that same average revenue.

With a Merchant Cash Advance (MCA), a business must accept credit cards.

Credit Card processing statements are reviewed to determine a merchant’s

eligibility to obtain an MCA. A business can expect to receive up to 200% of their

gross monthly credit card revenue.

With an ACH or Bank Statement Advance, a business DOES NOT have to accept

credit cards. 4 months of business bank statements are analyzed to determine a

merchant’s eligibility to obtain this advance. A business can expect to receive 40%

to 85% of their gross revenue.

Cash Flow Advances are short term. Terms typically range from 3 months to 24

months. 9 months+ is uncommon for most businesses. Businesses who receive

terms 9+ months often include healthcare businesses and businesses where the

personal credit of the owner is 680+.

With an MCA, a business will be debited daily Mon- Fri, excluding holidays,

anywhere from 9% to as high as 32% of their credit card sales revenue to pay the

advance back.



On an ACH or Bank Statement Advance, a business has a set amount debited from

their bank account daily Mon-Fri, excluding holidays.

In terms of a payback month, funders typically count 20 payback days per month.

Some businesses may qualify for weekly debits instead of daily.

HOW DOES A BUSINESS QUALIFY FOR A CASH FLOW ADVANCE?

Minimum 450 credit score

Time in business: 6 months

Must have business bank account

Minimum Gross Revenue: $10,000/mo

Tax Liens over $25K should be on a payment plan

Bankruptcy must be discharged

No more than 5 negative days per month on bank statements

RAINSTAR CAPITAL GROUP FUNDING PROGRAM

PROGRAM TERM FUND CAP POSITIONS ACH/MCA CREDIT MIN TIME IN

BIZ

FACTOR RATE

A UP TO 18 MO

$2M 1ST ONLY BOTH 650+ FICO

1YRS 1.18+

B-C 6-9 MO $300,000 1ST & 2ND

BOTH 470+ 4 MO 1.35+

HIGH RISK

1-4 MO $150,000 1-3 BOTH 450+ 4 MO 1.40+

Minimum Annual Revenue: $100,000 and Minimum Avg Daily Bank Balance: $500

Number of Negative Days: Up to 7 in 3 consecutive months. No more than 9 in a recent month

Tax Liens- Must be on a payment plan if over $25K

Bankruptcy- Must be discharged

No industry restriction on High Risk Program

A UCC search will be done prior to funding and a UCC filed post closing



Some programs require origination and processing fees that are deducted from the advance. Please

note that RAINSTAR CAPITAL GROUP DOES NOT CHARGE UP-FRONT FEES OF ANY TYPE.

ARE THERE ANY INDUSTRY RESTRICTIONS?

The following list of industry types are typically PROHIBITED with A paper

funders, however, we have a home for every industry type:

Accounting services (including tax prep) Entertainment Groups

Adult Entertainment & Retail Finance Companies

Attorneys Gambling/Casino

Auction Houses/Flea Markets Heating Oil Sales

Auto Sales & Rentals Kiosks

Bail Bondsmen Mortgage Lenders

Brokers Non Profit Organizations

Cannabis Growers & Sellers Pawn Shops

Cell Phone Shops Payday Loan

Check Cashing Real Estate Investment

Class 3 Weapons Dealers Religious Institutions

Collection Agencies Video Sales & Rentals

Consignment Shops Insurance Agencies



WHAT ARE SOME PREFERRED INDUSTRY TYPES?

Assisted Living Facilities Amusement

Auto Repair Appliance Dealers/Sellers

Bakeries Architecture Firms

Barber Shops Caterers

Beauty/Cosmetic Supply Store Clothing Wholesalers

Bike Shops Construction /Contractors

Bowling Alley Convenience Stores

Coffee Shops Daycare

Card & Novelty Stores E-Cigarette

Dental Practices Electricians

Donut/Bagel Stores Fuel Related

Drug Stores Furniture/Mattress

Franchised Concepts Grocery Stores

General Merchandise Stores Home Based Businesses

Gift Shops Hardware Stores

Home Health Care Home Improvement

Hobby Shops Hospitals

Hospital Equipment Hotel/Motel

HVAC Ice Cream Stores

IT/Communications Internet Retail

Laundry & Dry Cleaning Learning Institutions/Day Care

Liquor Stores Lumber/Wood Products

Medical Practices Mining

Merchant Wholesalers Nightclubs

Pet/Pet Supply Printing/Publishing

Restaurants Radio/Television

Recreational Vehicles Salon

Sporting Goods Transmission Shops

Tanning Salons Transportation/Freight



Theaters Tobacco & Cigar Shops

Toy Stores Veterinary Services

Vending Food/Beverage Web Retail

Distribution Manufacturers

Landscaping Nail Salons

REQUIRED DOCUMENTATION:

SIGNED- 1 Page Application (Electronic Signatures are NOT

acceptable)

4 Months Business Bank Statements

4 Months Merchant Processing Statements (if business accepts credit

cards)

Photo ID

Voided Business Check

Copy of Business Lease or Mortgage Statement

In Some cases, especially on higher advance amounts and seasonal businesses,

additional documents may be required:

YTD Profit & Loss

Additional Bank Statements

Complete Tax Returns

Articles of Incorporation



STEPS TO GET DEALS FUNDED

Submit minimal documentation for funding pre approval/offers

Signed 1 Page Application

4 Months Business Bank Statements

4 Months Merchant Processing Statements if applicable

Within 4-24 hours, processing will email you a spreadsheet with funding offers for

your merchant. See Example Below

Dear Joe,

Please see the offers below for Mac’s Heating & Air. Please discuss these options

with your client and let us know which offer he would like to go with.

ADVANCE FACTOR TERM PAYMENT COMMISSION

$22,300 1.32 5 mo 294.36 daily $1115.00

$17,250 1.26 4 mo 271.68 daily $862.50

Once we know which offer your merchant accepts, a contract will be emailed to

him/her for either a wet signature or an electronic signature. At this time an email

will also be sent to you, requesting the documents needed to fund the file.

Typically this will be: copy of photo id, voided business check and lease/mortgage

statement.

Upon receipt of signed contract and documents, the file will be sent for final

underwriting.

Underwriting will verify landlord/lease, verify bank account, call the merchant to

discuss the terms and make sure he or she understands the advance.



Upon successful completion of the above due diligence, the file will move to

funding review.

After verification that everything is in order, a wire will be sent to your merchant’s

account.

ONCE SIGNED APP & DOCS ARE RECEIVED BY UNDERWRITING

THE TURN AROUND TIME IS TYPICALLY A FEW HOURS TO 1 DAY.

OTHER TYPES OF ALTERNATIVE

COMMERCIAL FUNDING

FACTORING/ACCOUNTS RECEIVEABLES FINANCING

Factoring is a form of alternative financing that will not only get a business the

working capital it needs, but it is a great way to streamline accounting – even

businesses who do not need money use factoring. Factoring is a method by which

companies sell their overdue accounts receivables to a collection company in

return for cash. For example, a manufacturing company has clients with

outstanding bills, but diverting time and payroll hours to have someone hunt down

that money would be a waste of resources. By selling those bills to a factoring

company, the business receives money (minus a percentage fee from the factoring

company), and they take the headache of tracking down the owed money off of the

company’s hands. Factoring is a great alternative financing method that allows

businesses to receive working capital from customer bills that might otherwise not

yield a single penny in a timely manner. Many businesses sell all outstanding

customer bills to factoring companies after 90 days or so, just to stave off any

strain on the cash flow, and to take any additional strain off of the accounting

department.



ASSET BASED LOANS

For companies that manufacture goods, restaurants, IT companies, beauty salons –

basically, any business that uses equipment – asset based lines of credit are a great

alternative business funding method. Lenders will extend lines of credit based on

the value of the equipment and hard assets owned by the business (and, by

extension, the business owner). The higher the value of the assets and equipment,

the greater the line of credit and access to working capital that can be extended to

the business.

EQUIPMENT LEASING/FINANCING

Can be used to purchase or lease, new or used commercial equipment or vehicles.

Customer must have at least a 500 credit score and some business credit history

that shows they can support the pay back on the lease. If there is no business credit

history, a guarantor’s credit score must be at least 680.

The vendor is paid directly for the invoiced merchandise.

Typical payback is 2-5 years with set monthly payments. Rates can range from 8%

to 30% depending on the credit risk

Some programs, especially for trucking companies, a down payment may be

required or the borrower can put up collateral that is valued 2X the value of the

trucks and equipment being purchased.

SMALL BUSINESS TERM LOANS & LINES OF CREDIT

We offer a small business loan product. To qualify a business must meet the

following qualifications:



o Min 640 credit score

o Min 2 years time in business

o Provide 2 year financial package to include (personal & business tax returns,

aged a/p and a/r reports, year to date profit & loss and year to date balance

sheets, personal financial statement)

o Min $250K a year in gross revenue

o Loans & Lines of Credit up to $1M.

o 7-10 day turn around time

o NO NEGATIVE CREDIT HISTORY ON CREDIT REPORT (no

bankruptcy, foreclosure, judgements or collections)

o Paybacks are bi-monthly & monthly depending on program

o Rates 7.99% to 19.49%.

o Terms are 1 year to 5 years

Commercial Real Estate Funding Programs

PRIVATE AND HARD MONEY

We specialize in Private Money and Hard Money for commercial and residential

investment deals. Our lenders lend on deals 100k and up on all asset classes. We

have specific programs for Fix and Flip Investors who need access to reliable

funding. For commercial deals our lenders will specifically lend on multifamily,

hospitality, office, industrial, self-storage, specialty use properties, owner occupied

and land.

BRIDGE LENDING

We work heavily with the top hedge funds, banks, specialty finance lenders, family

offices and private equity firms that provide bridge loan products for deals seeking

capital of 1M and up. Our lenders will provide bridge financing on multifamily,



hospitality, office, industrial, self-storage, specialty use properties, owner occupied

and land.

CONVENTIONAL LENDING

Where banks say no, we say yes. Our national lending platform of lenders across

the U.S. that have a focus nationwide and deliver solutions that clients may not be

able to get from local sources. Getting your deal funded is about who you know

and we have built the right relationships for you with the right lenders saving you

valuable time, money and resources!

SBA PROGRAMS

We work with the top local and nationwide SBA lenders that fund

deals nationwide The SBA offers many great programs from their SBA 7A to SBA

504 programs specifically designed for owner occupied properties. If you are a

business owner looking for capital- reach out to us to discuss how an SBA loan can

be your solution!

CONDUIT LENDING

Our Conduit lenders provide conduit loans for borrowers who are seeking the

lowest permanent fixed-rate pricing. Our Conduit lenders lend on multifamily,

hospitality, office, industrial, mobile home parks, warehouse, self-storage, and

retail (NNN) properties.

HOSPITALITY LENDING

Our nationwide lenders can provide for flagged and non-flagged hotel/resort

properties purchase, refinance and PIP (Property Improvement Plan) financing for

properties nationwide. Please contact us if you need Hospitality Financing!



MULTIFAMILY LENDING

Our nationwide lenders can provide loan products 100k and up on any multifamily

unit size 2 units and up. Fixed rate, interest only and floating rate are all available.

ASSET BASED LENDING AGAINST LUXURY ART, YACHTS, CARS

We have relationships with hedge funds that look to provide short term asset-backed loans for individuals

and business owners in need of fast capital who wish to bypass the time-consuming, paper-intensive

process of a traditional bank loan. Our lenders allow clients to borrow up to $50,000,000 against personal

luxury assets like high-end motor vehicles, luxury watches and jewelry, precious metals, fine art, boats,

and more.

If your business is seeking funding or you are looking to join the Rainstar

Capital Group team as a broker, ISO or in house sales representative please

contact our CEO- Kurt Nederveld.

Kurt Nederveld

CEO

Direct: 616-821-6535

Email: [email protected]


rainstar capital group alternative funding overview

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