North American Cable opens financing arm
WEST CHESTER, Pa.--North American Cable Equipment, a manufacturer and distributor relatively new to the security industry, announced in late December the creation of NACE Finance, a financial services company designed to serve the working capital needs of small- and medium-sized dealers and distributors. Though NACE won't be funding loans itself, it will be acting as an underwriter, approving the loans and matching customers with appropriate funders.
This may indicate the beginning of a trend where smaller dealers can find better loan availability, reversing a situation that Jim Wooster, Jr., president of Alarm Financial Services, recently identified as "becoming more limited for alarm companies." AFS last year created a similar small-loan program.
"Let's say [a distributor] has a swell in business," posited Aaron Starr, president of NACE Finance, "their working capital gets tied up" as they wait for invoices to get paid. "We can buy the invoices at a discount so they get immediate cash, or we can get them a loan using their invoices and inventory as collateral."
As for dealers, Starr said NACE could facilitate Small Business Administration loans, or help dealers develop leasing programs. He said the latter is where NACE can be of most help, as dealers can turn small jobs into bigger ones. If a customer feels a full security system is too large for the budget allotted, Starr said, "rather than the customer looking at their bank account, they can look to lease the equipment."
Starr said this is the sort of thing for which NACE has been passing on leads to finance companies, and now "we're able to be in the process from the beginning, making sure the funders have the confidence and have us to lean on in case there's a default; we can do the resell instead selling assets for pennies on the dollar at auction."
NACE traditionally has sold to satellite resellers, but has been over the last 18 months marketing and selling to the security channel, as well as encouraging satellite dealers to use their expertise to get into residential CCTV and audio work, said Starr.