ICG is a niche finance company that provides financing to growing small and middle-market companies. Our clients usually cannot obtain financing from traditional sources such as banks or asset based lenders because they are growing too fast, have not been in business long enough, or do not have sufficient assets to acquire funding from an asset-based financing source. In order to prudently finance in this challenging market, we use a proprietary financing technique called Business Process Financing that focuses on the purchase and sale of inventory.
We are not a lender, but rather a reseller of goods. We fund inventory by purchasing either new inventory directly from your manufacturers, or existing inventory from your company that we then hold in our name. Typically, when you have a firm buyer, usually a customer with a credit card or a factorable account receivable, we sell this inventory back to you and collect the cash from a blocked bank account previously set up for this purpose.
Our clients generally have high profit margins, quick inventory turn cycles, and many growth opportunities. As long as the client uses the financing for high-margin growth opportunities, the client is almost always better off using us to finance them rather than equity financing, despite the fact that we charge a premium for our financing. The trade-off is between paying us a percentage of your contribution margin today, and paying an equity partner forever. Most companies choose the "short term” alternative.
We do not specialize in any one industry and have had clients from a wide variety of industries including the health products industry, exercise and sports products, and electronics. Our clients fall into several general categories:
1. Direct Marketers:
Direct Marketers include infomercial, short- form spots, print advertisers, radio advertisers, catalogs, direct mail, door-to-door, the “pitch” market, etc. The common factor with all of these clients is that they have statistically-driven sales processes direct to the end consumer, and therefore can rely on the “law of large numbers” to drive their results.
2. Import Marketers: Import Marketers include a wide variety of products and companies that are engaged in locating cheap sources of production overseas, and selling to large domestic retailers. Most of this production is from Asia, namely China, Korea, and Japan. Typically, we require that our clients sell into a letter of credit, or have a very broad distribution network.
3. Companies with Short-Term Cash Flow Issues: This is the most variant of the categories, but usually involves a client with excess inventory due to a short-term event. For example, one of our clients lost its major client. Because our client demonstrated that its remaining business was sufficient to liquidate the inventory (and usually there must be additional assets for collateral in this case), we were willing to purchase their excess inventory to provide our client with short-term working capital.
Because of the nature of the financing provided, we do not provide financing to certain industries and/or situations. These generally include:
- Retailers who sell through distributed retail locations.
- Sellers of perishable products, clothing importers who do not deliver firm letters of credit.
- Manufacturers of products with long production cycles, or production cycles where raw materials undergo a significant labor component to produce the final product.
- Regulated products such as medicines.
- Job shop manufacturers such as printing companies, metal die stampers and plastic extruders.
- Financings behind a first position lender who will not execute an inter creditor agreement.
- Financings where full repayment is scheduled for more than 6 months.
- Companies whose mark-up is less than 25%.