Providing working capital for growth and survival . . .

1. Capital Advantage Funding Putting your assets to work for you… Providing working capital for growth and survival . . .

2. Accounts Receivable Financing (Factoring) • The purchase of invoices, at a small discount . . . • From business to business or business to government . . . • For goods or services . . . • Rendered in the past . . . • to strong or many customers.

3. The Three Ways to Fund YourBusiness • Equity – Sell Your Ownership • Debt – Sell Your Credit Worthiness • Factoring – Sell Your Asset (A/R)

4. Equity, Debt or Factoring? • Equity -SEC regulations -Sell stock or ownership in your business -Find an interested buyer -Could cause harmful liquidation ratios -Decreases control -Raises Cash -No debt, no repayment responsibilities

5. Equity, Debt or Factoring? • Debt (Loans) -Strong financials (personal/business) -Limits future borrowing availability -Generally high interest rates -High administrative and transaction fees -Limited in amount -Encumbers ALLassets both business and personal

6. Equity, Debt or Factoring? • Factoring -No Start-up fees -Not Debt -No loss of equity -No loss of control -No balance sheet entry -Unlimited availability -Only A/R encumbered

7. Equity, Debt or Factoring?….continued • Factoring -No high interest charges -Discount fee only, similar to discounts given to a cash or 10 day payor -Highly Flexible

8. Understanding Factoring • Factoringis not a Loan! ! ! • Factoring Defined………. Factoring is a commercial funding strategy in which a business sells all or some of its accounts receivable in order to provide steady, predictable cash flow. The receivables are sold at a modest discount similar to the discount offered by vendors to their customers for cash or quick payment.

9. Understanding Factoring…. The Process • Invoices purchased in 2 installments -“advance” -“reserve” • Advance- up to 80% within 24 hours of invoice verification Reserve-customer has paid and the balance goes to vendor, less discount fee

10. Understanding Factoring…The Process • Invoice…….…………………………………….…......... $1000.00 • Advance……………………………….….…………………….$800.00 • Invoice is paid in 21 days, Reserve balance…………….………………..$200.00 • Typical Fee for 21 days outstanding…(.00089 daily)……..……. ($18.69) • Net reserve paid to vendor…....……………..…. $181.31 • Total paid for invoice…………………………………...$981.31 • Total discount on sales….…...............…$18.69/$1000.00 = 1.869%

11. Understanding Factoring Once the reserve portion in the cycle of payments activates, the vendor is receiving 95-98% of revenue monthly

12. Understanding Factoring Month Month Month Month Month -1--2--3--4--5- 80%80%20%80% 20%From Month20% From Month -2- Etc….month after month -1- (Less Fees) (Less Fees)

13. Financial StatementStrengthened Financials • Before Factoring Assets Accounts Receivable……………………………………... $1,000,000.00 Cash………………………………….……………………………. $200,000.00 • After Factoring Accounts Receivable………………………………………….. $200,000.00 Cash……………….…………………………………………….. $1,000,000.00 Very Strong!

14. Benefits of Factoring • Unlimited availability of funds • No debt on your books • No personal and business assets tied up (Just A/R) • Norequired pay-off periodically • No high interest rates • Nonumerous and high administrative costs • No restricted use of funds

15. To Get Started . . . • Short one-page application • Copy of A/R Aging Report • Copy of top page of Articles of Incorporation

16. Which Factor Is Best For You? Capital Advantage Funding Stephen Shipp, CCFC Tel: 866-200-9797 www.capadfunding.com