Factoring Collateral and Liens
At minimum, all factors will require you to pledge accounts receivable and general intangibles as collateral. To do this, factors file a collateral lien with the Secretary of State in the state in which your business is incorporated. This lien puts the factor in the first position to claim rights to the asset should you default on your factoring obligations.
For some factors, this is the sole lien required. For others, a blanket lien is placed on all business assets. This can pose a problem if you have previously pledged your assets in order to obtain other forms of financing, or if you wish to reserve certain collateral to attract additional future funding.
If your business presently has
secured collateralized funding, factoring can still be possible as long as your
present financial institution is willing to subordinate their lien(s).
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With Hamilton, there is no obligation for businesses to expose corporate assets under a blanket lien. Hamilton requires a first lien solely on accounts receivable and general intangibles, and no other assets. Not only does this reduce risk for Hamiltons clients, it allows for more flexibility in the event a business has outstanding debts with other financiers. Hamilton has a wealth of experience in negotiating workout and transition strategies for businesses with pre-existing arrangements with other lending institutions, as well as the IRS. Because of Hamiltons minimal lien requirements, such strategies are more readily achievable. |
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