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Debt Advisory
SMB Compass Debt Advisory Group focuses on structuring and placing tailored financing options for companies.
About Our Debt Advisory Group
As an independent firm, SMB moves efficiently through engagements and its advisors execute with the best interest of the client in mind. We are fully invested in finding the appropriate financing path for our clients.
Founded by former lending professionals, SMB Compass has deep-rooted relationships within the lending marketplace. Our partners are a combination of lending institutions across the credit spectrum. We work with Banks, Specialty Finance Companies, Family Offices, and Private Equity groups. Our mission is to develop a path for companies and lenders to work with efficiency and transparency. As a liaison to our partners and clients, we think that all parties in a refinancing process can benefit from a thorough and thought-out process. Our firm and our professionals deliver “Efficiency by way of transparency“.
The SMB Process
SMB was founded with the purpose of providing entrepreneurs and businesses, in numerous industries, with a transparent and effective advisory tool to navigate through the challenges of a capital raise. Our advisors invest countless hours to work with clients to develop a strategy and process that best fits the particular situations of our clients. For us, our process all starts with our relationships. Our professionals have cultivated long-standing and deep relationships with partners and clients. We work with an exclusive yet robust channel of financing and lending relationships. Most debt raising processes are filled with gaps, friction points, and time absorbing tasks.
For potential borrowers, the process can be a burden on the company. For lenders, there are risks in the amount of time and effort spent on any one transaction that may or may not lead to a closing. There’s an opportunity risk for one and all involved. Our methodology of “Efficiency by way of transparency” allows for a smooth financing process that attacks and removes all these gaps and friction points. Our approach and goals are to provide a thoughtful process to all parties involved in financing.
Our Clients
Our clients are Privately-Owned or Sponsor-Owned companies that are based in the U.S. The typical client we work with has a time-sensitive financing need due to a combination of multiple factors. See below a representative summary of who and what makes up our ideal client:
Client Characteristics:
Ownership
- Private or Family Operated
- 100% Sponsor Owned
Metrics
- $5MM – $500MM in Revenues
- $1MM-15MM in EBIDTA
- Financing Needs between $1MM-25MM
Situations
- High-growth
- Turnaround
- Change in Management or Partner Buyouts
- In Workout or Seeking an exit with a lending institution
- Acquisition
Our Lending Partners
Our lending partner’s platform is made up of a base of large and small institutions. On a nation-wide level, we have distinct and deep-rooted relationships with all of our lending partners. Our platform includes the following types of lenders:
Client Characteristics:
Banks
- Regional, Community, and National Banks
Bank Groups
- Business Banking
- Commercial Lending
- Asset Based Lending Groups
- Middle Market Lending Groups
Hedgefunds
Family Offices
SBA and USDA Lenders
- Asset Based Lending Finance Companies
- Factoring Companies
- Purchase Order Funders
- Bridge Lenders
- Real Estate Lenders
- BDC's
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Lending Solutions
SMB Compass is deeply rooted in the Commercial Finance space. With personal relationships and established partnerships, we provide sound market feedback and advice on what financing solutions work best for our clients. Our experience in structuring loans from $1MM up to $25MM enables us to provide broad and extensive financing options with an industry-agnostic approach. We take control of the process and we aid in a historically cumbersome process for our clients. We seek to be a catalyst in the debt-raising path and provide the clearest and most direct approach to a successful closing of commercial loans. Through a refined and strategic approach, we create operational and underwriting efficiencies for our clients and lending partners. SMB Compass helps clients structure and arrange credit facilities with expertise in the following structures:
SBA and USDA Lenders
- Asset-based Loans
- Accounts Receivable Financing
- Revolving Lines of Credit
- Collateralized by Accounts Receivable, Inventory or Machinery & Equipment, and Real Estate
Cash Flow Based Term loans
- Unitranche Financing
- Non-Dilutive Growth Capital
Split-Lien and Second Lien Loans
- Carve-out negotiations
- Mezzanine
- Junior Debt
- Bridge Financing
The Major Difference Between Invoice Financing vs. Factoring
While both invoice financing and invoice factoring can help businesses bridge cash flow gaps caused by outstanding invoices, there are some key differences to consider when choosing the right option. Here's a breakdown of the main distinctions:
Here’s a quick summary to help you decide:
Choose Invoice Factoring if…
- You need help collecting payments from slow-paying customers.
- You don’t mind giving up some control over the collection process.
- Your business creditworthiness might not be ideal.
Choose Invoice Financing if…
- You want to preserve control over your customer relationships.
- You have good credit and can potentially qualify for lower fees.
- You have the resources to manage your own collections.
1. Selling vs. Borrowing
Invoice Factoring: This approach is like selling your unpaid invoices to a factoring company at a discount. You essentially trade the invoice for immediate cash minus the factoring fee.
Invoice Financing: This option is more like taking a short-term loan from a financing company. You use your unpaid invoice as collateral, and the financing company advances you a percentage of the invoice amount. You'll then repay the advance plus interest and fees once you collect payment from your customer.
2. Customer Involvement
Invoice Factoring: The factoring company will typically notify your customer that they have purchased the invoice and will handle collection. This means your customer will pay directly to the factoring company, not to you.
Invoice Financing: Your customer remains completely unaware of the financing arrangement. They will continue to make payments directly to your business as usual.
3. Collection Responsibility
Invoice Factoring: The factoring company takes responsibility for collecting payment from your customer. This can be helpful if you deal with slow-paying customers, but it also means you have less control over the collection process.
Invoice Financing: You are still responsible for collecting payment from your customer. This gives you more control over the communication and collection process but requires more effort.
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Choosing Between Invoice Financing vs. Invoice Factoring
Now that you understand the key differences between invoice factoring and financing, it’s time to consider which option might be a better fit for your business. Here are some factors to weigh in on your decision:
1. Control Over Customer Relationships
Invoice Factoring: Since a third-party company gets involved in collecting payment, this can potentially impact your relationships with customers. They might be surprised or concerned to see a new company handling their invoice.
Invoice Financing: You maintain full control over customer communication and collections. This allows you to preserve relationships and manage the collection process according to your usual practices.
2. Creditworthiness
Invoice Factoring: This option can be a good fit for businesses with slow-paying customers or less established credit history. The factor relies more on the creditworthiness of your customer to determine the advance amount and fees.
Invoice Financing: Financing companies might be more likely to consider your business’s credit history when determining eligibility and interest rates. If you have good credit, you might qualify for lower financing costs.
3. Cost
Both factoring and financing have fees associated with them. Factoring fees might be higher as they include the factoring company’s service of collecting payment. Financing fees typically involve interest on the advance amount. To get the best deal, it’s essential to compare the fee structures of different factoring companies and financing providers.
Loan Amounts
$10,000 – $5,000,000
Rates
Starting at 7.99%
Speed
24 - 48 Hours
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