Frequently Asked Questions about Asset-Based Lending
What kind of company is CAFI?
- CAFI is an Asset-Based Lender
- CAFI purchases and advances money against approved for payment invoices
Which type of companies are good candidates for CAFI?
- Commercial Construction Contractors
- Service Contractors • SBA 8(A) Contractors
- Federal Government, State & City Municipalities Primary and Sub-Contractors
- Engineering Companies
- Architects • Ground Maintenance
- Food Service
- Janitorial Companies
- Long and Short Haul Trucking Companies
- IT Tech Support
- Home Health Care
- Any company that generates Accounts Receivable is a good candidate for CAFI.
How does CAFI mitigate risks?
- CAFI purchases & takes ownership of the invoices that are being financed
- All fundings are backed by Joint Check Agreements and Assignments
- CAFI only funds invoices for work completed or materials that are approved for payment
- All CAFI customers are subject to:
- Credit Bureau Report
- UCC-1 Lien Search thru the State Of Secretary Office
- 8821 IRS Tax Information Form is forwarded to the I.R.S. to check for I.R.S. liens or any collection activity
- CAFI files UCC-1 Financing Statement on customer’s Accounts Receivable
- All principals of the company sign a personal guaranty
- Customers typically get paid within a 30 to 60 day period which increases the collectability of a payment
- CAFI monitors customer’s lien rights in the event there is a collection problem
What happens when a customer files Bankruptcy?
- We cease funding any future invoices until their Bankruptcy Attorney pursues a Super Priority Lien for CAFI
- Once the Bankruptcy Court approves our program and the Super Priority Lien is in place and assigns a maximum limit, CAFI will resume funding its customer. This lien secures CAFI’s 1st lien position on the Accounts Receivable and protects our customer and CAFI from all Account Debtors
- CAFI purchases invoices to be funded and are protected from Bankruptcy because CAFI owns the invoice and still pursues payment from the Account Debtor. i.e. Customer sells their “Asset” to CAFI and CAFI becomes the owner of the Asset
What happens when the IRS files a lien on one of our customers?
- Our procedures avoid any potential problems with the IRS. All customers sign the IRS 8821 Form when we set them up. IRS always sends preliminary notices whenever a tax payer falls behind on their taxes.
What are the benefits of using CAFI?
- Quick approval process (1 to 3 days)
- Financial Statements and IRS Tax Returns are not required
- Increases purchasing power to purchase materials for the project CAF is funding. Most venders offer a 2% discount when they are paid early by CAFI.
What is the qualifying process for a new customer?
- Provides LLC or Corporate documentation
- Copy of Driver’s License • Order credit check on each owner
- Perform lien search with the Secretary of State (look for bank liens, judgments, IRS liens, child support issues)
Are their potential usury problems?
- CAFI is not lending against invoices but is actually purchasing and taking ownership of invoice for a fee. Our Discount Fee is not subject to usury laws.
How does a company qualify for your program?
- If a company sells goods or provides a service to other companies with a good credit rating and have not pledged their A/R to a financial institution as collateral, most companies will qualify for our program
- Banks are a good referral source for new customers. Most Banks will subordinate our customer’s account receivable to CAFI
- CAFI funds “Start Ups”.