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W&D Weekly
September 28, 2016
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From Window & Door Magazine
On Display in the Dream Showroom
The central focus of this year’s Window & Door Dealer Days event, held at GlassBuild America, is the Dream Showroom, offering exhibits tailored especially to window and door dealers. The revamped and elevated space features residential fenestration products and technologies in an upscale home-inspired showroom. See the Products
Pella Expands Smart Home Capabilities with Built-In Security Sensors
MFM Building Products Issues WindowWrap Instructional Video
21 States File Lawsuits Regarding Overtime Rule
Product Spotlight
The Perfect Cutting Solution for Aluminum
TigerSaw 2000 is the ideal optimizing push feed saw for aluminum -  no more setting stops manually, simply enter your cut list and place material on the infeed. TigerSaw 2000 comes with an adjustable cutting envelope, so you can set the system for the material you cut, and improved pneumatic clamping options prevent damage to fragile or sensitive materials. All with a repeatable accuracy of +/- .012 inches (.3 mm). Watch the video.

The Talk

By Scott Simpson, BlueTarp Financial

If you’re a typical dealer of windows and doors, you need a $1.5 million line of credit for every $10 million in business. Accordingly, if your revenues are $5 million, a $750,000 LOC is what’s required. This level of funding assures you’re not chronically cash hungry and have funds for early-pay discounts, inventory, strategic investments or even a recession.

Finding a bank is its own challenge, and then there’s an added hurdle: what if the bank says no? There are some alternative sources of cash that can help in such a situation.

Mezzanine Debt: Mezz debt is a category of capital that sits between secured senior debt, which is secured by assets and equity (e.g. stock in the company). Mezz debt should be complementary to a LOC and you typically access a revolving credit facility or a term loan. The debt provider is subordinate to your existing bank line in the event of bankruptcy. Accordingly, the cost of money will be high and the mezz debt provider will require warrants in your company. Providers include Merion, Caltius and Digital Partners.

Short-Term Loans: There’s a crowded field of providers for short-term loans. They offer quick cash infusions, but watch for hidden fees and high interest. Some advertise rates “as low as 9.9 percent,” but after origination fees and depending on length of the loan, the effective rates can run much higher. Providers include OnDeck, Kabbage and CAN Capital.

Receivables Financing: Also known as debt factoring or invoice financing, this approach offers advance funding on invoiced accounts. You can submit invoices selectively, but the effective cost can be high. Providers include BlueVine and Fundbox.

Credit Management: Also complementary to a LOC, credit management providers fund businesses upfront on all B2B sales and protect from credit risk. They also offer operational support, collections and customer service. The cost of trade credit runs 1.5 to 3 percent per transaction. Providers include BlueTarp.

Any of these options could be right for you, based on funding needs, what you’re willing to pay and how quickly you need the cash. But fully investigate the pros, cons and relative costs of each option.

Have you explored alternate funding sources? Weigh in on this week’s poll, post a comment or email your thoughts on the subject. 

Has your company explored any alternatives to traditional funding?
Yes, and it worked out great
Yes, but it did not help our situation
We've tried but can't get approved
We don't need alternative funding
We don't want to pursue these types of options
We haven't but will now consider it

Does Your Company Educate Sales Staff about Antitrust Regulations?
Only thirty percent of the respondents to last week’s poll said "yes." See the Full Results


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