Financial services for technology companies.
Tech companies all around the world are popping up, each with something special to offer. For those who are unfamiliar with what it takes to run a corporation, we believe that these businesses have constant cash flow that allows them to ensure all of their operations can happen without a hitch. This includes paying employees, paying off past debts, and having some extra cash when slow growth hits. Unfortunately, even the most successful companies need assistance at times. For this, many reach out for financial facilities. In this article, we will take a look at what financial facilities are, how they can help tech companies, and the services offered by Alpen Partners.
What is a Financing Facility?
A financial facility is a type of financial assistance that is offered by a financial institution. The financial assistance is typically used by companies that require operating capital. Facilities include overdraft services, deferred payment plans, lines of credit, Swingline loans, and more. Essentially, a facility is a loan taken out by a company. When a company seeks a facility, they make an arrangement with a public or private lender that allows the corporation to borrow a specified amount of money for various purposes for a predetermined amount of time. This loan does not require any collateral. The facility agreement lays out the details of the borrower’s responsibilities, loan warranties, lending amounts, interest rates, loan duration, default penalties, as well as the terms and conditions of repayment.
Typically a corporation will utilize facilities in order to avoid laying off their employees, stay afloat during seasonal sales cycles when revenue may not be high enough or survive a slower growth period. Overall, a facility is used to ensure a company has cash at all times. It can be hard to stay afloat, even for successful businesses, when certain events may prevent a company from making a profit all year long. With a facility, the company is able to pay back the loan with interest over a period of time, often monthly or quarterly. Another benefit of the facility is it allows companies to access borrowed money without having to reapply for loans every time they need it.
Financing Facilities for Tech Companies
As tech companies grow and new development are made every day, financial institutions are seeing rapid growth in tech companies in need of financial facilities. Technology companies, especially start-ups, rely on heavy marketing and reaching a lot of people and often require a sizeable amount of employees. With a lot of overhead costs and not a lot of income at the beginning, tech companies often seek facilities to pay employees and have cash as needed. One of the biggest problems tech companies face is cash flow. Here are some examples of facilities that may be needed to assist a technology company:
- Overdraft services- This is a facility that offers a company money in the event their cash account is empty. These services cost less than loans and can be completed very quickly. Another benefit is there are no penalties for early payoffs.
- Business lines of credit- A business line of credit is a financial facility that grants a corporation access to cash with the benefit of competitive rates and flexible payment options. There are traditional, non-traditional, and revolving lines of credit, depending on the institution. Many companies with low cash balance will choose a revolving credit as it provides access to funds any time the business needs capital. Also, revolving credit does not have a specific limit and no set monthly payments.
- Term loans- If a company is looking for funds to finance a large investment or acquisition, they will typically seek a term loan. This is a commercial loan that has a set interest rate and maturity date. An intermediate-term loan is under three years and is typically paid back monthly while a long-term loan may be as high as twenty years and backed by collateral.
- Letters of credit- A letter of credit is used by domestic and international trade companies in order to facilitate transactions and payments.
- Swingline loan- This is a short-term loan that provides a business the funds needed to cover debt commitments. They are used to cover shortfalls in cash flow and pay down existing debts.
Alpenrose: Global Financial Facility
The best way to keep your tech company successful is with the right financing partners. Building on many years of experience in private banking in Switzerland, Alpenrose Wealth Management International AG provides investment advisory services to global clients. Together with its partner banks, Alpenrose provides employees of technology companies with a financing facility of up to 30M against restricted, as well as unrestricted, employee shares. Whether your company needs to ensure they keep up with payday or are looking to pay off some past debts, our expert team is ready to help. We also offer cash flow management services, portfolio monitoring, and much, much more!