As one of Great Clips’ premier financing partners, we are committed to providing the highest level of service to the Great Clips community.  We pride ourselves on low rates (See our guaranty here) and quality service.

As part of our dedication to quality service, we believe that the better informed you are, the better decisions you’ll make.  We are committed to “raising the bar” when it comes to business financing.  To that end, we want clients doing business with our company to be fully informed about the various financing options available to them.  We are confident that the more information you have about leasing and financing, the more likely you are to understand why you should use InSource Capital.

Know Who You’re Working With

As members of our local Better Business Bureau and the National Association of Read more »

Over the last decade, “traditional” sources of financing for franchises have included conventional financing, SBA or other government supported options, use of 401k money and what many people call “friends & family”

As credit marketplaces and government regulations change, each one of these options has experienced major changes and challenges.  Business people in general, and franchisees in particular, still have the need for credit, and as a result, new options have been developed to meet that need.

One of the most popular is an option called Securities Based Financing.  This is NOT a Margin loan and does not come with the inherent risks associated with margin accounts.

With Securities Based Financing through InSource, qualifying for financing is a quick and simple process that usually only takes a few days.  Once approved, cash can be delivered only a few days later, after the proper documentation is put in place.

There are no hidden fees.  All securities remain in your complete control.  You benefit completely from any “upside” realized from your investments.

What’s the catch?  In all honesty….. there isn’t one.  There are some fees to get started (fully disclosed in a formal proposal) but other than that, this is a very simple, flexible option that provides immediate cash without the need to sell securities.

For more information and a no obligation quote, contact Brian Link at 818-565-6252.

The Inspector General’s office has obtained convictions and guilty pleas in the last decade totaling more than $260 million in SBA loans for cases involving loan agents. In a six-month period starting in late 2009, investigators identified loan agent-related schemes in more than $60 million of SBA loans.

Read the full article here.

Since our founding in 2001, our company has committed itself to providing the best rates and the best service available in the marketplace. During 2008, we implemented the Low Rate Guaranty, and the policy of formally surveying each of our customers for feedback. Our survey provider has given us the results of 2009′s survey.

Among other things, we ask each of our customers to rate our service during three periods of time, while gathering information prior to credit approval, the time after credit approval and prior to funding, and during the funding process. In addition, we ask them to rate our service “in general”.

They are given the choice of rating our service as Poor, Fair, Average, Good or Excellent.

We are proud to announce that 100% of our new customers in 2009 rated our service as either Good or Excellent. All but one was willing to openly provide a reference for InSource.

Some comments include:

“Brian said he would provide good service and did. Cindy was excellent; patient and helpful. We will use InSource again for our future expansion.”
“So easy ….. thanks for all your help…..two salons and both handled perfectly”
“Good experience. I really appreciated your understanding of how our business works!”

When choosing to work with a partner for your financing, remember that not all companies are the same.

For more information, please feel free to call Brian Link at 818-565-6252 anytime.

Even in today’s challenging credit marketplace, if you work with the right partner, you get results!

As an approved financing partner for Great Clips franchisees, InSource is proud to announce that we have funded our seventh new salon build in the last 30 days.

Our clients, both new and existing franchisees, choose us for a variety of reasons.  Some because of our quality service, some because of our knowledge of the Great Clips system, some because of our expert ability to work with vendors, suppliers and landlords.

And all of our clients benefit from the most attractive commercial financing rates in the market today, as documented in our Low Rate Guaranty.

If you haven’t experienced financing the way it was meant to be, call us to review your next project.  One franchisee said working with us was “like a dream come true”.

Contact Brian Link at 818-565-6252 or via email at brian@insourcecapital.com.

At the Great Clips 2009 National Convention in September, 2009, Brian Link was asked to give a presentation to the Convention’s attendees.  He talked about the financing options available to most franchisees, and the strategies available to help decide which option is best.

Please feel free to comment and provide your feedback below.

Last Friday, the SBA announced a revision of their Standard Operating Procedure for financing of goodwill in re-sale transactions. According to IFA Vice President of Government Relations David French, “This change in the SBA goodwill financing guidance is good news for the franchise industry. The previous guidance would have eliminated the ability of many franchised small business owners to transfer or sell their company.”

The new guidance, which will become effective Oct. 1, removes the cap on goodwill financing that was set at $250,000 or 50 percent of the loan amount, whichever as lower.

Specifically, the new SBA guidance provides that:

• If the intangible amount is under $500,000, lenders may finance 100% of goodwill without restriction.

• If the intangible amount is greater than $500,000, lenders may finance 100% of goodwill, provided that the purchaser injects 25% or more into the transaction as equity. This may include standby seller financing (2 year minimum) as a portion of the equity injection.

• Additionally, language forcing lenders to explore seller financing on all transactions was stricken from the document. Lenders now have the flexibility to determine if seller financing is appropriate on a transaction by transaction basis.

For more information, see http://bit.ly/19UbZg

A recent article that appeared in the Herald-Tribune in Sarasota Florida reported on the results of a recent poll of SBA lenders.  The specific poll was to get feedback on a recent SBA memorandum (Viewable here) but the reported comments were fascinating.

It “scares me to death,” is one lender’s response.

Another said, “At a time when SBA is looking to promote small business lending programs, the issuance of this notice will call into question continued participation”.

Multiple Personality Disorder

Multiple Personality Disorder (MPD) is defined as a disorder “whereby two or more distinct and separate personalities are manifested within the same individual, each displaying different interests and behavior patterns.”  Today, the credit industry has two distinct personalities, often in conflict with each other.

On the one hand, there is a big push to extend credit. The federal government has been pumping money into the system for months now and the prime rate is lower than it’s been since WWII.  On the other hand, regulators are on the lookout for anything that remotely resembles a return to the types of industry practices that contributed to getting us where we are today. The memorandum referenced above includes ominous sections entitled, “Strengthening Oversight of 7(A) Lenders” and “Identifying and Recovering Improper Payments”.   Banks are looking for deals to fund, but many seem afraid to do so.

As a result, many transactions that make very good sense from traditional credit point of view are frozen in their tracks. Many credit officers, understandably, would rather turn down a good transaction rather than risk the consequences of a ‘bad loan’.

At InSource, the essence of our business is finding quality lenders/underwriters for our clients. A few years ago, as lenders were chasing down high yield, real estate backed securities, we had more customers than we had underwriters.  Now, not a day goes by where I don’t get calls from an underwriter asking me to send them business.  “We have money to lend”, they say.  The problem is in the underwriting.

Every lender has an “appetite”.  Some like certain types of transactions and others like different types of transactions.  The days where common sense prevailed and underwriters were willing to do things “outside the box” seem to be only a memory.  In fact, many underwriters want to stay right in the middle of the box.

The Treatment

The accepted treatments for MPDs are wide and varied.  In this case, we can start by having realistic expectations on both sides.  Borrowers need to understand that the days of 3% unsecured money for start up companies aren’t here anymore.  Lenders need to understand that they are in the business of taking appropriate, mitigated risk.  If we can meet in the middle, everyone will be OK.

I’d welcome your thoughts and your feedback.

(Please note that this information applies to SBA guaranteed loans only.  It does not apply to commercial, non-SBA loans.  Approximately 90% of the transactions InSource does with Great Clips franchisees are done on a commercial basis.)

It was with great fanfare that the economic stimulus package was signed back in February.   Among the many features of the 2009 Recovery Act included $730 million worth of reduced (or eliminated) SBA fees, increased guaranties and other dedicated loan programs.

But down in the fine print was something that has become an issue with many franchise related transactions, including Great Clips.  Buried in the SBA’s recent revision to its Standard Operating Procedure (SOP) guidelines are some new rules effecting the financing of “goodwill”.

The new guidelines limit “goodwill” financing to 50 percent of the loan amount or a maximum of $250,000.  Goodwill is the value of a business that can’t be accounted for through physical “stuff”, things like assets in a warehouse or signs, chairs, or other hard, physical assets.  In the case of a typical Great Clips transaction, it represents the value of the cash flow, which in most cases is worth much more that 50% of the transaction.  As we all know, the true value of a Great Clips salon is not the value of the underlying assets but rather the value of the cash flow generated by a successful business.

Shortly after the new guidelines were announced, the SBA was flooded with concerns about the effect of this policy.  On March 5, 2009, the SBA announced that it would entertain loan applications that do not meet these guidelines and would review them on a “case-by-case” basis.  The net result has been uncertainty and confusion in the lending community that has already impacted many transactions.

The SBA does not directly lend money to small firms, but works with partner banks to offer a variety of loan programs that the agency partially guarantees.  When the SBA’s participation in a given transaction is uncertain, lenders today will opt for a very cautious approach and in some cases, not even entertain good, quality transactions.

This is one of the causes in what has been predicted as a 40% drop in SBA related franchise lending.

Fortunately, InSource’s commercial programs continue to be alive and well.  They are not burdened with the government requirements involved in SBA lending.

This presentation was originally delivered to the Salon Profitability Institute, hosted by Great Clips in May of 2008.  Clearly, a lot has changed in the credit marketplace since then, but the basic principles remain the same.

The presentation runs a little over 8 minutes.  We hope this is useful information and would welcome your feedback and comments.

InSource recently funded a $400,000 Great Clips salon acquisition. No real estate was used. Our rates were very competative and our only security was the salon assets and the personal guaranty of the franchisees.