Versant Funding funded a $4 million non-recourse factoring facility for an aerospace machining and engineering company. The facility enabled the company to pay off an asset-based lender while also providing liquidity to meet pent-up demand.
Versant Funding is a provider of non-recourse factoring solutions to businesses in need of liquidity. Versant Funding’s custom non-recourse factoring facilities focus exclusively on the credit quality of a company’s accounts receivable. Versant Funding offers non-recourse factoring solutions to companies with B2B sales.
Aerospace Machining
About Versant Funding
Versant Funding’s custom Non-Recourse Factoring Facilities have been designed to fill a void in the market by focusing exclusively on the credit quality of a company’s accounts receivable. Versant Funding offers non-recourse factoring solutions to companies with B2B sales from $100,000 to up to $10 Million per month. All we care about is the credit quality of the A/R.
Versant Funding worked with a software company in the Midwest to provide a non-recourse spot factoring transaction in support of the company’s sale to a private equity group. Chris Lehnes, a business development officer for Versant Funding, explained the intricacies of the deal as well as the benefits of and uses for spot factoring more generally.
How was this financing opportunity originated? Was it through organic business development or referral?
The investment banker representing this business on a pending sale to a private equity group was first introduced to me several years ago. He’s been in my marketing database ever since and called after receiving one of my email marketing campaigns with what he thought was a “crazy idea” of using factoring to meet his client’s urgent working capital needs.
Why did the company need financing and why was a non-recourse spot factoring facility the right option?
The company was a couple of weeks from closing on the sale of their business, but one of the conditions of closing was the seller meeting certain obligations that the business did not have the cash on hand to accomplish. The deadline to meet one of these obligations was about a week away, so a speedy funding solution was essential.
With our non-recourse factoring program, we rely solely on the strength of our client’s customers. Therefore, we did not need to spend time underwriting the business and getting comfortable with their performance. They had an invoice outstanding from a large, multinational food business with a very strong credit rating which was expected to pay in a couple of weeks. Factoring this one invoice would provide the business the cash they required to meet their obligation and our quick process was able to meet their very short time frame.
What were some of the unique elements of this deal, if any?
Versant Funding’s preference is to enter into ongoing factoring relationships with our clients, so the simple fact that we were providing “spot” factoring made the transaction somewhat unique for us. But, in addition, the company had a tax lien with a payment plan in place. Since there were insufficient proceeds to pay off this lien, we escrowed a few months of payments, which provided us protection against the company falling behind on their payments before we were paid by their account debtor.
The client in this deal was in the process of completing a sale to a private equity group. How did the ongoing sale process affect this deal, if at all?
The impending sale kept the client highly motivated to close the deal promptly and very responsive to our requests along the path to a quick funding.
How does non-recourse spot factoring differ from other types of factoring arrangements?
While many factors require an ongoing factoring commitment, our willingness to fund spot transactions enables us to also fund businesses which have a very short-term working capital need which can be met by factoring a single invoice.
The non-recourse aspect of our factoring program allows us to fund “tough” transactions that would be declined by most recourse factors. Since we are solely focused on the strength of our clients’ customers, the financial performance of our clients is not relevant to us. That enables us to fund businesses that are very new, growing rapidly or struggling as long as those businesses have strong customers and therefore good quality accounts receivable. Recourse factors are typically underwriting the performance of the business and the strength of management as well as the quality of the A/R. Many of our non-recourse factoring clients either would not pass that scrutiny or simply do not have the time to wait for the underwriting process to be completed.
What kind of demand has Versant Funding seen for spot factoring facilities like this during the first half of 2021? Are you expecting more or less activity on the spot factoring front as the year goes on?
Recently, I have seen an increase in spot factoring requests as compared to prior years. However, in at least one case, while the initial request was for spot factoring, after further discussions of the benefits of an ongoing factoring arrangement, the client accepted our proposal for a 24-month factoring facility.
I am constantly marketing to my referral sources how Versant Funding’s non-recourse factoring program can be used as a bridge. Often, we are providing a bridge to an equity raise or a sale or just providing a company time to grow and stabilize to the point that they can qualify for bank financing, which could be years away. I expect that my messaging will continue to also source short-term bridge opportunities where a spot factoring arrangement may be a better fit.
Press Release: $5 Million – Non – Recourse – Tech Company
Versant Funding LLC is pleased to announce it has funded a $5 Million non-recourse factoring transaction to a tech company which sells hardware and software to major media companies.\
PRESS RELEASE -Versant Funds $5 Million Non-Recourse
Factoring Transaction to Tech Company
This private equity sponsored business required a rapid infusion of capital to meet its cash needs through the end of the year. Versant was able to quickly put a factoring facility in place which will provide the company with the short-term liquidity they sought.
“Versant’s offering was an excellent match for this business in need of bridge financing,“ according to Chris Lehnes, Business Development Officer for Versant Funding, and originator of this financing opportunity. “Because our approach to factoring focuses solely on the quality of accounts receivable and does not require an underwriting of our client, we were able to fund this large, complexly organized business faster than any traditional funding source could.”
About Versant Funding
Versant Funding’s custom Non-Recourse Factoring Facilities have been designed to fill a void in the market by focusing exclusively on the credit quality of a company’s accounts receivable. Versant Funding offers non-recourse factoring solutions to companies with B2B or B2G sales from $100,000 to $10 Million per month. All we care about is the credit quality of the A/R.
Press Release: $4.5 Million Non-Recourse – MedTech Company
Versant Funding LLC is pleased to announce it has funded a $4.5 Million non-recourse factoring transaction to a MedTech company which provides services to major hospitals and pharmaceutical companies.
$4.5 Million Non-Recourse Factoring Transaction to MedTech Company
This venture capital funded business expects to receive an Employee Retention Credit (ERC) from the IRS in the coming months but was looking for a source of funding to bridge them to that payment. Versant was able to quickly put a factoring facility in place which will provide the company with the short-term liquidity they sought.
“Versant’s offering was an excellent match for this business in need of bridge financing,“ according to Chris Lehnes, Business Development Officer for Versant Funding, and originator of this financing opportunity. “Because our approach to factoring focuses solely on the quality of accounts receivable and does not require an underwriting of our client, we were able to fund this business faster than any traditional funding source could.”
About Versant Funding
Versant Funding’s custom Non-Recourse Factoring Facilities have been designed to fill a void in the market by focusing exclusively on the credit quality of a company’s accounts receivable. Versant Funding offers non-recourse factoring solutions to companies with B2B or B2G sales from $100,000 to $10 Million per month. All we care about is the credit quality of the A/R. To learn more contact: Chris Lehnes, 203-664-1535, clehnes@chrislehnes.com
Versant Funding LLC is pleased to announce it has funded a $4.8 Million non-recourse factoring transaction to a commercial bakery which serves major grocery chains.
Commercial Bakery
Versant’s newest client is a closely held business which has the opportunity to expand by selling their products to additional supermarkets, but many of these potential new customers will pay their invoices slowly, negatively impacting the cash flow of the business. This is a problem Versant’s factoring offering can solve by quickly advancing cash against those invoices.
“Versant’s non-recourse factoring program is a great fit for this growing business which needs cash in order to expand,“ according to Chris Lehnes, Business Development Officer for Versant Funding, and originator of this financing opportunity. “Because our approach to factoring focuses solely on the quality of accounts receivable, for a business like this with a very strong customer base, we are able to provide an elastic credit facility which can grow as the AR levels of the business increase.”
About Versant Funding :Versant Funding’s custom Non-Recourse Factoring Facilities have been designed to fill a void in the market by focusing exclusively on the credit quality of a company’s accounts receivable. Versant Funding offers non-recourse factoring solutions to companies with B2B or B2G sales from $100,000 to $10 Million per month. All we care about is the credit quality of the A/R. To learn more contact: Chris Lehnes, 203-664-1535, clehnes@chrislehnes.com
With a rich history of lending experience, Chris Lehnes utilizes factoring education and referral source marketing to enhance business development at Versant Funding and help commercial loan brokers diversify their alternative loan options for small business clients.
Chris Lehnes, business development officer at Versant Funding, has made it an ongoing personal challenge to educate financial professionals about factoring. “It’s not anybody’s first choice of financing. I talk to a lot of newly-minted brokers thinking about focusing on commercial real estate lines of credit or merchant cash. They don’t often plan to focus on factoring,” Lehnes says.
A greater awareness of the benefits of factoring can give commercial loan brokers a broader range of alternative credit options for small businesses. This is particularly relevant in the COVID-19 pandemic economy, as companies struggle to keep their doors open and many can no longer meet traditional credit parameters, Lehnes says. www.naclb.org | DEALMAKER | OCTOBER 20 |19
“A lot of small businesses, all they know about finance is the bank. All they know is that if you need a loan, you go to the bank, and when the bank can’t meet their needs, they’re going to need help,” Lehnes says. “Well-trained commercial loan brokers will be a great asset to small businesses in this market.”
Learning the Landscape Lehnes’ own career journey began at a bank, where he worked for a year and a half before being recruited by a non-bank lender. “I got hired as a documentation specialist at AT&T Capital in their SBA group, which also introduced me to SBA financing,” Lehnes says. “And then I spent the next 15 years there.”
AT&T Capital changed hands several times, eventually becoming CIT. Throughout that period, Lehnes worked in documentation, credit underwriting and operations management before moving into a leadership role where he oversaw lead generation, national accounts and direct marketing efforts.
From CIT, Lehnes moved to another nonbank lender doing SBA loans. In 2008, the company lost funding due to the credit crisis and let its entire team go. On his way out the door, Lehnes was approached by Mark Weinberg, currently president and CEO of Versant Funding, who ran an affiliated factoring group at the time. Lehnes agreed to begin looking for factoring deals for Weinberg until Lehnes could find a position in the SBA industry.
Lehnes found it appealing that Versant specialized in one thing: factoring. He learned a lot about the product over time and grew a nice sized book of business.
After five years, Lehnes left Versant to join a company with a more diverse lending offering but eventually realized that Versant was where he belonged and returned in 2019.
Marketing Audience Matters Lehnes honed his business development skills at CIT, focusing on marketing to referral sources. In the factoring world, there is minimal benefit to marketing to business owners, as they are less familiar with what factoring is and when they should use it, Lehnes says. Instead, he focuses on intermediaries, advisors and trusted specialists.
“All my efforts are getting in front of, and speaking with, bankers, attorneys, consultants and coaches, and all those people that help small businesses get through their challenges, so that when one of their challenges could be met by factoring they can recommend what I do,” Lehnes says. “Then I’m getting an introduction to a customer or a prospect, whoever has provided some endorsement of me.”
These marketing efforts also support Lehnes’ desire to have a broad network of referral sources to keep deal flow coming in. As a boutique factoring company, Versant targets “difficult deals” that other factors wouldn’t normally pursue, including businesses with poor financial performance and credit issues or newly founded companies with no track record.
“We’re not going to do dozens of deals a month like some factoring companies. We’re going to do a handful of deals in a year and grow our portfolio slowly and deliberately,” Lehnes says. “I know there are plenty of business development professionals out there in the industry that have a nice core group of referral sources that keep them busy. Instead, I just have a really huge network, some of which I might only hear from once a year, or even less, but that large network is enough to keep the pipeline going.”
Bridging the Credit Gap By focusing on tougher deals, Versant Funding deals with short-term relationships lasting 24 months or fewer with the majority of its clients. “Sometimes they’ll renew with us and stick around a little longer, but we fully acknowledge that we’re a bridge,” Lehnes says. “We’re a way to get a business to the next step of their evolution, where they’re stable enough to get bank financing, or they’re large enough to go out and raise equity, or just that they’re profitable and can move on to a cheaper form of financing.”
Versant Funding is national in scope, with a preference for U.S.-based businesses with domestic receivables. Average annual revenue for its clients is usually between $5 million and $10 million, although the company can fund deals from $100,000 to $10 million per month in factoring volume, Lehnes says. Some of its clients are small businesses and others are middle market companies, while many are privately or family-owned, or have professional ownership with private equity backing “We’re fine with all of those structures, so our client base covers a pretty big range,” Lehnes says.
Looking Beyond COVID-19 Lehnes’ immediate goal is figuring out the new world order and how the COVID-19 pandemic changed which deals to pursue. “Businesses that sell heavily into traditional retailers, that do a lot of work with the oil and gas industry, or the travel industry, those are all areas that looked great nine months ago that now we’re very cautious about,” Lehnes says. In the long term, Lehnes expects to see a continuing pullback of credit from traditional sources across the industry as defaults and delinquencies increase. “When lines come up for renewal, I think we’re going to see banks being really careful,” Lehnes says. “What we’ve seen in some previous recessions is that banks will work hard to hold on to the customers that they really want and will neglect or let go of the rest.” This will create opportunities for non-traditional lenders to fill the gaps.
While Versant is well capitalized, many factors and non-bank lenders rely upon banks to provide them a line of credit to meet their funding needs, Lehnes says. “I wouldn’t be surprised if we see some pretty good scrutiny of some of those lines of credit. Many small factoring companies are funded by other factors, some of which may have made some unwise choices during these times and might be struggling to continue to refactor some of their smaller partners,” Lehnes says.
Educating the Market Lehnes always keeps factoring education in the forefront so brokers can put it to their client’s advantage when the time comes. “Factoring is not well known, and a lot of times what is known about factoring scares people,” Lehnes says. “They’ve heard a bad story about some factor that was an ‘evildoer’ and did some things that they shouldn’t have done, and that story goes everywhere.” He sees the coming months as pivotal for re-education.
For commercial loan brokers looking to even out their own cash flow, building a book of factoring transactions goes a long way. “While it’s great to close a real estate deal and get a nice big check at closing, that’s one check,” Lehnes says. “Factoring provides an ongoing commission. You close a factoring deal; you’re going to get a commission monthly for the life of the deal.”
ABOUT THE AUTHOR – Article: Factoring in Focus Grace A. Garwood is a freelance writer and editor based in Brooklyn, NY. Rita E. Garwood, editor in chief of DealMaker, interviewed Chris Lehnes for this article.
Accounts Receivable Factoring can quickly meet the working capital needs of manufacturers and distributors, including those focused on the healthcare industry.
The underwriting focus is solely on the quality of a company’s accounts receivable.
This enables us to help fund businesses which do not qualify for traditional lending, but have receivables due from strong customers.
Financing Healthcare Suppliers
Program Overview $100,000 to $10 Million Competitive Advance Rate Non-recourse Flexible Term Most businesses with strong customers are candidates.
We fund difficult deals: New Businesses Highly Leveraged Reporting Losses Customer Concentrations Weak Personal Credit Character Issues
In about a week, we can advance against outstanding accounts receivable to qualified businesses.
Contact me today to learn if your client could benefit.
Non-Dilutive Growth Capital – Funding without giving up ownership
Our accounts receivable factoring program can be the ideal source of financing for businesses which are growing rapidly, but not ready to raise equity.
Growth Capital
Program Overview
$100,000 to $10 Million
Competitive Advance Rates
Non-recourse
Great fit for Manufacturers, Distributors or Service Businesses
We specialize in difficult deals :
Reporting Losses
Rapidly Growing
Highly Leveraged
Customer Concentrations
Out-of-Favor Industries
Weak Personal Credit or Character Issues
In about a week, we can fund against accounts receivable, providing the vital liquidity needed for growth. Contact me today to learn if your client could benefit.
Factoring: Financing for Wholesalers – Quick Funding for Distributors
Our accounts receivable factoring programs can be the ideal source of financing for wholesalers where growth is constrained by inadequate working capital.
Distributors
Program Overview
$10,000 to $10 Million
Competitive Advance Rates
Non-recourse – No PG
Flexible Terms
Most businesses with strong customers are candidates
Your funding source for tough deals
Losses
Rapidly Growing
Highly Leveraged
Customer Concentrations
Declined by bank or other lender
Weak Personal Credit
Character Issues
In about a week, we can advance against accounts receivable, providing the essential liquidity needed for growth. Contact me today to learn if your client would benefit. Chris Lehnes 203-664-1535 talk/text clehnes@chrislehnes.com Connect on LinkedIn Request a proposal
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In 1918, the United States implemented DST with the Standard Time Act as a wartime measure for seven months during World War I.
In 1916, the Germans adopted DST to help save energy.
During World War II, President Franklin Roosevelt re-established the idea of DST. Year-round DST, or “War Time”, was implemented again during World War II.
In 1987, President Ronald Reagan signed the Federal Fire Prevention and Control Act of 1986 into law, which amended the starting date of DST to the first Sunday in April.
