Alarm Financial services offers dealers no-account-buy funding
SAN FRANCISCO-Alarm dealers who want financing for acquisitions and debt consolidations, but do not want to sell off accounts, can check out a new financing program announced in July by Alarm Financial Services.
Aimed at dealers seeking loans of $150,000 to $1 million, the program includes term loans up to 60 months as well as revolving lines of credit. AFS currently also offers outright acquisition of alarm accounts and a "50-50 hybrid" financing program where a dealer gets back one-half of accounts financed.
"Dealers sometimes miss the opportunity to make an acquisition in a local area because they don't' think they can borrow the money because banks have not been responsive to them," said Jim Wooster Jr., president of AFS, who with his father, Jim Wooster Sr., chief executive officer, owns Alarm Financial Services. "Banks may not see the value. We do see the value and they can borrow from us."
The senior Wooster has been in the security industry for 39 years, and was an independent dealer, in California and Ohio, for 20 years.
"We understand the dealer world," he said. "We're not finance guys who got into the alarm industry. We're alarm guys who got into the finance industry."
The Woosters say their program, which was launched in April, but not officially announced until July, fills a void in the industry, which is mostly populated by financing programs for people looking for more than $1 million and programs for dealers who want to sell their accounts.
The net effect of the AFS program is that dealers "don't have to change the central station they use, don't change the equipment they provide, don't have to change the billing. They don't have to change anything. They do get money," Wooster Sr. explained.
The accounts are not sold, "they are used for collateral. It's not a free lunch, but it's a lot less expensive than other lunches out there," he continued.
Tony Smith, president of Security First Alarm Group, who announced a new dealer program at ISC West (see the latest on that program, "Security Partners joins SFA" in the August 2006 issue of Security Systems News) said he's known the Woosters for more than 15 years. "They're some of the highest integrity individuals in this industry," he said. One of the main differences between the two programs, he said, is that the Woosters make "loans on an existing contract portfolio basis. We do not make such loans; we do make loans on single new contract transactions (using our customer contract forms) and they won't," he said.
Smith said he and the Woosters have referred dealers to each other. "This is the cooperative spirit we've been working with since they started their program and we started ours," he said.