US. companies contract monetizing

 

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WHO, WHAT, WHEN, WHERE, WHY & HOW OF

CONTRACT FINANCE

 

WHO can benefit from Contract Financing?

Literally, there are thousands of small companies – ranging from long

lived to emergent – that either have or are working on contracts with investment

grade credits. These companies could use your help to provide desperately

needed capital to complete their contracts.

 

WHAT is Contract Financing?

Contract Financing (or monetizing) is a very flexible financial tool providing

a number of capital options – much less expensive and onerous than equity or

sub-debt. So long as there is an equipment component, contract financing can

be used to:

  • Acquire equipment necessary for the fulfillment of a service contract
  • May provide much needed working capital to run your business and/or develop infrastructure to facilitate the contract services
  • Refinance existing equipment and improve cashflow
  • Accelerate contract revenues
  • As an entre’ to repeat business
  • Each transaction is a custom product designed to meet the needs of
  • you and your customers.

 

Lender provides contract financing for just about any contract where a component

of equipment is necessary to complete the contract. There is a provider (usually

a smaller company) and an end user (investment grade). The term of a Contract

Finance can be as short as 12 months, or as long as 10 years.

This product has a variety of applications and has worked successfully with:

  • Service Agreements
  • Software as a Service
  • Warehouse Agreements
  • Management Agreements
  • Distribution Agreements
  • Muni Contracts
  • Federal Contracts

 

WHY can the Contract Finance product be valuable to you?

The Contract Finance deals are averaging close to $6 million per transaction

(although a number of contracts in various stages of process would

dramatically increase that average). This form of financing could be extremely

valuable to smaller companies that don’t have the resources to buy equipment or

adequate working capital. In many cases, it can be used as an alternative to

equity or to augment existing equity in the provider company. In fact, many

smaller companies do not bid large contracts for fear that they will be unable to

fulfill them because of a lack of capital. The equipment necessary to fulfill a

contract can be existing equipment that is refinanced or sold and leased back, or

brand new equipment that is located at either the provider’s or the end user’s

location. These need not be a new contract to qualify for Contract Finance. ICL

can monetize the remaining balance/term of an existing contract.

 

HOW does Contract Financing work?

Lender will work with your customer and provide language, which is embedded in

the contract via addendum, that will allow an assignment of all or a portion of the future revenues to be taken. A present value of those revenues will give your customer the capital they need to complete the contract. In many instances, a present value consisting of even more than the essential capital needed to acquire the equipment, injecting much needed working capital.

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