Business Growth Capital : CapeVance

CapVance is a short-term working capital "Loan" for Visa/MC merchants. Loan amount is based on the merchant's previous 6 month average (12 months if the business is seasonal) monthly sales volume on Visa/MC. Typical loan amount is 70% - 100% of the monthly average. Typical term is 6 months.

Loan is amortized by an automatic daily payment based on the merchant's Visa/MC sales. Typical daily payment % is 15% - 20%. Merchant has the option of using a fixed daily payment instead of % of daily sales.

SINCE CAPVANCE is a Loan being amortized by irregular daily payments, no one can forecast the exact amount of the interest to be paid over the life of the loan. There are two CAPVANCE product, regular rate and lower rate:

	Regular rate program typically costs $1,200* per $10,000 borrowed over six months. As a rule of thumb, the shorter the term, the lower the interest amount.
	The Lower rate program typically costs $700* per $10,000 borrowed over six months. The lower rate program is offered only in the following states: CT, MI, NY, OH, RI, and TX

* We have made the following assumptions when we projected the interest amount; 1) The total monthly VS/MC sales amount will be exactly same as the average monthly balance for the life of the loan, 2) Daily VS/MC sales amount is exactly the same adding up to the total monthly sales amount.

Regular rate program typically costs $1,200* per $10,000 borrowed over six months. As a rule of thumb, the shorter the term, the lower the interest amount. The Lower rate program typically costs $700* per $10,000 borrowed over six months. The lower rate program is offered only in the following states: CT, MI, NY, OH, RI, and TX.

We currently do not accept any new application for AR and FL. Applications from OR must be over $50,000.

CAPVANCE is paid back automatically. BGC initiates an ACH to the business checking account based on the amount of Visa/MC sales and the agreed upon payment percentage. It means that the 100% of the merchant's settlement is deposited to the merchant, and BGC debits the merchant's account for the daily payment (usually on the same day of the settlement deposit). Therefore, it is very important that the merchant leaves enough balance in the bank account to cover BGC's payment. BGC charges the borrower for the same amount BGC gets charged by its bank for bounced payment. Currently, it is $10 per NSF returns.

This means that the merchant statement will be completely free of any loan related activities. All loan related transactions will only show up on the merchant's bank account.

Here is a simplified summary of the typical transaction flow (48 hour settlement):

Monday
Merchant batches out the terminals before the daily cut-off.

Tuesday
ISO/Processor sends the daily report to BGC for the Monday's batch.
BGC issues ACH debits to the merchant's bank accounts based on the daily report received from the affiliated ISO/Processors.

Wednesday
Settlement from the Monday batch is deposited to the merchant's bank account.
BGC's ACH debit payment reaches the merchant's bank account.

To apply for CAPVANCE, the borrower must either be a Corporation, Limited Liability Company or Limited Liability Partnership (not the same as a Limited Partnership) formed and operating in the USA. In CA only, the borrower can be any type of legal entity including the aforementioned or a Sole Proprietorship, Partnership and Limited Partnership.

The borrower must have been in business for a minimum of 12 months and have minimum of 6 month credit card processing history.

Owners must have a social security number. If the owner is not a US citizen, we must see the copy of the owner's permanent resident alien card (a.k.a., Green card) or Visa (in the passport) & I-94 page on his/her passport.

We cannot make personal loans under any circumstances.

Eating/drinking establishments, i.e. restaurants, bars, taverns, etc, are the best candidates for CAPVANCE because; 1) 60 - 70% of their revenue is generated via VS/MC, 2) Traditional lending sources do not like the restaurant industry, 3) their gross margin is usually high enough to absorb the daily payment.

Retail, automotive repair, full service spas, dentists, cosmetic surgeons are also a good source of new deals.

We consider internet merchants, furniture stores & gas stations a high risk.

We currently cannot work with adult industry businesses.

This information is only provided to help screen "bad" deals. It is in no way a complete underwriting guideline.

We look at both the business (D&B reports) and the owner's credit history.

We look beyond the credit score, but we'd like to see a minimum credit score of 550. If the owner has a very limited credit history, we would probably reject the deal regardless of the credit score. What is more important than reviewing the owner's credit history is the payment behavior of the owner in the past. The following is a partial list of points we look at:

	Amount of credit history in the credit report: The amount of history should commensurate with the age of the owner. As a rule of thumb, the more history, the better.
	Delinquencies: We understand that some lateness is inevitable as an owner of a small business. But numerous and serious delinquencies (over 90 days) will lower the chance of approval.
	Number and Amount of collections.
	Number and Amount of Liens & Judgments: If the business/owner has tax liens, there has to be a payment plan in place and the payment plan must be current. We do call the tax authority to verify the status of the payment plan.
	Bankruptcy: A recent bankruptcy (within 5 - 10 years) will usually result in rejection.
	Total number of owners: The more, the better.

Over 90% of BGC's customers re-up their loans. Merchant can request a re-up when the loan balance is down to about 20% of the original loan.

Re-up of the loan is almost always approved as long as the previous loan wasn't defaulted.

Re-up funding can be done within 1 - 2 days of the request. Request can be made by a phone call or a fax.

Borrower must send their most recent bank statement in its entirety when requesting a re-up.

Daily Payment Percentage never changes from what was stated in the loan document unless the merchant requests it. Many of BGC's merchants with high/low business cycle request lowering of the daily payment percentage before they go in to their slow season and change it back after the slow season is over.

Merchant can request daily payment percentage change in writing. BGC almost always accommodates the request as long as it is reasonable.

BGC does not change the daily payment percentage without first discussing the change with the merchant.

Application Package

	Application package containing "signed" application, copy of the driver's license of each owner, and a copy of the business check can be either faxed to BGC or mailed. Please make sure the applicant answers ALL questions. If any of the questions are not applicable to the borrower, they should put in "N/A".
	Please make sure to provide us with your bank's phone number, preferably your branch's number. It is very important because we may have to call the branch to obtain wire transfer instruction when we fund the loan.
	If faxing, please make sure originals are in good condition because faxing usually deteriorates the legibility. Driver's licenses are notoriously difficult to send via fax. Please enlarge the copy if you can before faxing. E-mailing a scanned image is the best way of sending the DL copy. Send to the following address: info@BusinessGrowthCapital.com
	If you or the borrower has a special request, it should be stated on the fax cover sheet.
	If the applicant uses a P.O.S. (point of sale) system, the funding could be delayed because the downloading of the P.O.S. system is done by the P.O.S. vendor. MICROS© is the worst in terms of response time. You should expect a 6 - 8 week delay for MICROS© conversion .
	Please make sure the application is clearly legible before faxing to prevent unnecessary delays.

Pre-Approval

	BGC usually makes funding decisions within 48 hours, assuming all of the information on the application is accurate.
	If BGC requires additional information, pre-approval could be delayed until receipt of such information.
	Timely response from the applicant will prevent unnecessary delay.
	Notification of pre-approval or rejection can be done either by us or by the referral source. Your preference should be communicated to us when submitting the application package.
	Once pre-approved, one of our affiliated ISO/Processors will contact the merchant to set up a new account. If the referral was made by the ISO/Processor, BGC will allow the ISO/Processor to have the merchant account unless there is a problem.

Follow-up Procedures

	Once the pre-approval is obtained, the applicant must send in the supporting documents listed on the application instructions as soon as possible. Merchant accounts are usually set up within a few days, and the follow-up verification must be completed before funding.
	The new signed merchant account application is necessary for BGC to prepare the necessary loan documents.
	BGC overnights the loan documents after all the supporting documents have been received and verified.
	BGC requires the following before funding: 1) Receipt of properly executed loan documents and, 2) ALL terminals and/or P.O.S. have been "downloaded" by the affiliated processor and BGC has received the first batch report.

Funding Procedure

	Funding is usually done via a federal wire transfer. BGC sometimes has to call the branch to obtain the wire transfer instructions. Therefore, all applications should have the branch phone number to prevent unnecessary delay.
	If part of the loan proceeds is being used to pay taxing authorities, a two party check will be sent out via Federal Express. BGC highly recommends the merchant to keep a copy of the check and the receipts for the payment for their records.
	If part of the loan proceeds is being used to pay other bills, checks made payable to the vendors will be either sent to the merchant or to the vendor directly at the merchant's request.

Post Funding Procedures

	The borrower must send back the original loan documents if the funding was done using the faxed copy. If the borrower fails to submit the original loan documents in a timely manner, BGC will not fund on fax copy to the same merchant in the future.
	BGC debits the merchant's bank account for the daily payment. Merchant must leave sufficient balance in their bank account.