| Question: When is a business loan not a
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| | receivable funding:
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| sufficient strategy to meet the working
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| | * After almost six months, hospital
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| capital needs of a hospital or other
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| | management was in the exact same cash
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| healthcare provider? Answer: When the
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| | flow situation they were in prior to
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| provider needs to improve its cash flow,
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| | their accepting the asset-based loan.
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| but cannot afford or chooses not to
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| | * The asset-based bank line was
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| increase its debt capacity...and/or the
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| | insufficient for their needs due to the
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| time constraints and the needed amount of
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| | bank's non-realistic and significantly
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| capital cannot be adequately served by
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| | "undervalued" valuation of the assets
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| the inherent limitations and delays in
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| | owned by the hospital.
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| the loan application process.
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| | * The bank was closely monitoring the
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| While loans are a viable and traditional
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| | hospital's accounts receivable (a
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| part of the working capital strategy of
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| | significant asset in the pool) and was
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| hospitals nationwide, they are not the
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| | quick to disqualify that collateral once
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| only funding vehicle available, nor are
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| | the aging reached 90 days. Consequently:o
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| they necessarily the best suited option
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| | The funding line at that point became
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| for a healthcare provider's growth,
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| | dependent on the hospital accounts
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| expansion, and, in some cases, healthcare
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| | receivable paying in 90 days or less.o
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| financial survival. The following case
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| | The line became "maxed out" and once
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| study clearly exemplifies how a hospital
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| | again meeting daily cash requirements
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| found its most effective funding solution
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| | became a challenge.
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| by trial and error.
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| | * Hospital management realized that the
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| The California-based hospital applied for
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| | significantly higher valuation of
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| medical accounts receivable funding with
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| | receivables by SCH as well as a longer
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| Sun Capital HealthCare, Inc. (SCH), while
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| | eligibility period provided the most
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| simultaneously applying for an
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| | appropriate solution to funding their
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| asset-based line of credit. In the
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| | financial requirements.
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| initial discussions, hospital management
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| | Using medical accounts receivable
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| indicated that their need was strictly
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| | funding, this capital-strapped healthcare
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| improved cash flow and that they viewed
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| | institution quickly put itself in a
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| medical accounts receivable funding as
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| | stronger cash position. They were able to
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| their funding method of choice. It would
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| | create new services and procedures, thus
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| provide them with a predictable and
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| | increasing hospital revenues, as a direct
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| steady cash flow stream based solely on
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| | result of this working capital strategy.
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| their hospital accounts receivable and
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| | In addition, because SCH's highly
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| the amount of funding would not be
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| | experienced owners know the healthcare
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| limited by the hospital's asset pool
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| | business, not just fund healthcare
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| being evaluated by a bank at "fire-sale"
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| | businesses; the SCH team was able to
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| prices. However, after SCH presented a
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| | assist hospital management and its
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| letter of intent that outlined the terms
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| | advisors with operational counsel that
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| and conditions of the transaction being
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| | contributed to the healthcare providers'
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| offered, hospital management instead
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| | financial survival and subsequent growth.
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| chose to execute an asset-based loan
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| | In less than two years, a traditional
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| being offered by a large regional lender,
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| | bank loan product was provided for the
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| largely due to their inability to move
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| | hospital that now is a very financially
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| away from the comfort-zone of their
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| | strong medical facility. Quoting the
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| traditional financial mind-set.
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| | hospital's CEO, "Without the help of Sun
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| Less than six months later, hospital
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| | Capital HealthCare's accounts receivable
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| management returned to SCH requesting
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| | funding program, we never would have
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| another accounts receivable funding
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| | reached a level of financial health that
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| proposal in order to secure the level of
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| | enabled us to qualify and appropriately
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| capital and flexibility they required.
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| | benefit from a bank's traditional
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| Here are the reasons the hospital gave
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| | financing facility. Thank you, Sun
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| for making the switch to accounts
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| | Capital HealthCare, Inc.
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