Small Business Solutions

• Do You Have an Exit Plan?
• Exit Planning: Are You Ready?
• Exit Planning: Is the time right for you?
• Exit Planning: Which Option is Right for You?
• Buy/Sell Succession Planning
• Accounts Receivable Financing
• Incentive Bonus Strategy
• 412i Defined Benefit Plan
• 401k Mirror Plan

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Accounts Receivable Financing

Years of hard work and effort went into getting your practice where it is today. The single largest asset of your business is typically your accounts receivable. Now, business success present two challenges for you:

• How can you protect your business?
• Will you have sufficient income to retire?

Accounts Receivable Financing addresses both challenges.

Here's how it works:

1. A loan is obtained from a third party lender.
2. As primary collateral for the loan, a portion of the business's accounts receivable plus any other acceptable collateral needed to equal the amount lent by the third party lender. The lender may file a UCC financing statement (UCC-1) with the Secretary of State where the business is located. This statement may provide the third party lender a priority claim over any other creditors for the accounts receivable pledged.
3. Interest must be paid to the third party lender every year the loan is outstanding.
4. Over time, the loan proceeds are distributed to the owner(s). The owner(s) then use that money to purchase a personally owned life insurance policy. The owner(s) names his/her heir(s) as the beneficiary.
5. When the business owner(s) retire(s), the loan is repaid using the outstanding accounts receivables.
6. The retired business owner can use the cash value in the policy to supplement retirement income, if they so choose.
7. When the business owner dies, his/her beneficiaries receive the life insurance net death benefit proceeds tax-free.