Small Businesses 'Capitalize' on UPS

Tuesday Jan 13th 2004 by Patricia Fusco
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Enhancing cash flow and access to working capital are two of the pressing needs small businesses face. UPS Capital, a financial services subsidiary of 'Brown,' is helping them address these needs as well as streamline shipping and receiving systems.

When you think about UPS, you probably think about two things — big brown tucks and the packages they deliver. While UPS certainly is a big company, and package delivery clearly is its primary service offering, you might not realize that UPS specializes in providing expanded services to small- and medium-sized businesses — namely, financial services.

Enter UPS Capital, the financial services subsidiary of UPS. UPS Capital has developed a specialty in serving small- and mid-sized companies with services that combine loans, leasing, and insurance with UPS's traditional package delivery and freight management services.

Increasingly, UPS's small- and medium-size customers are signing for more than parcel pickups and deliveries. Companies as diverse as an online toy retailer, a bakery cafe franchiser, and electronic components distributor have tapped into UPS's capital services.

Toy Story
For Chicago-based toy e-tailer Toynk.com, UPS Capital Business Credit is providing a five-year $200,000 loan, supported by a Small Business Administration (SBA) guarantee, and a one-year $50,000 secured line of credit so the company can purchase more inventory.

Additionally, UPS Supply Chain Solutions are providing international transportation management and customs clearance for the new inventory shipped from Asia to the United States via air and sea. UPS also is providing package delivery and integrating UPS package tracking tools into the Toynk.com Web site.

"This solution has met our needs from every angle, from enhancing our cash flow to more efficiently moving our inventory into our warehouse and then on to our customers," said Steve Loney, Toynk.com's president. "And it came at the perfect time for us, kicking in for the holiday shopping season, which accounts for 35 percent of our annual sales."

Rising Expectations
Bakery café franchiser Atlanta Bread Company wanted to expand and automate production. UPS Capital is providing $1.8 million in financing for equipment for the company's commissary in Atlanta, which serves more than 160 bakery cafés in 24 states. In addition, by selecting UPS for air express and ground package deliveries, Atlanta Bread Company has enjoyed a significant reduction in the time required to process its shipments.

"We have experienced phenomenal growth in the past 10 years and we're not finished. In 2004, we expect to expand to 200 locations," said Alan Sack, Atlanta Bread Company chief financial officer. "To meet these growth plans, we are expanding our commissary production capacity and the lease from UPS Capital is making that possible."

Soaring High-Tech Sales
Falcon Solutions, currently ranked as the 8th fastest growing technology firm in America by Entrepreneur magazine, has been a UPS package delivery customer since its founding in January 2001.

The Roswell, Ga.-based Falcon now is utilizing UPS Capital's Collect On Demand (C.O.D.) Automatic program to accelerate its cash flow. With C.O.D. Automatic, funds generally are available within one to two days after product deliveries are confirmed by UPS. Additionally, UPS Capital has provided a short-term credit facility, while credit insurance provided through UPS Capital Insurance Agency protects the value of Falcon Solutions' open accounts receivable against default or non-payment.

"UPS offers value, innovation and convenience across the board," said Doug Braun, president of Falcon Solutions. "UPS Capital took the time to understand our business and to build customized financial solutions traditional lenders wouldn't deliver. They saw the value of our business through the eyes of the transportation relationship."

Giving Credit Where It's Due
UPS Capital provides a range of services — from asset-based lending and accelerated payments to revolving lines of credit and insurance products. Additionally, UPS Capital Business Credit specializes in facilitating loans through the government-guaranteed programs of the SBA, U.S. Department of Agriculture and Export-Import Bank of the U.S.

Bob Bernabucci, UPS Capital president, said combining financial services with UPS's expertise in moving goods could often help small businesses improve their cash flow and streamline operations.

"Small businesses represent a significant portion of UPS's customer base, and we support them by providing working capital through government-guaranteed loans along with other services such as small-business credit cards," Bernabucci said.

Loans are normally made to qualified customers against standard collateral such as accounts receivable, inventories and fixed assets, but they may also include additional availability based on the value of other business assets including leases, patents, and trademarks — if supported by a definite appraisal.

And much like conventional lending institutions, UPS also provides business credit card services. Right now, the company is offering charge accounts with no annual fees, generous credit lines, and as part of an introductory offer, zero percent fixed financing for up to nine billing cycles. The UPS Capital Visa Platinum Business Card from UPS Capital can be applied for online.

UPS Capital's robust portfolio helps companies finance their businesses and accelerate the velocity of funds throughout the supply chain. Whatever type of cash infusion your small business needs — long-term working capital, a revolving line of credit, or even export inventory financing — odds are that UPS has a financing package that suits your needs in a way once reserved only for traditional banks.

Kurt Kuehn, UPS senior vice president of worldwide sales and marketing, said the move means that the company does much more than move goods around the world.

"Globalization of the economy helps both large and small businesses expand their markets and lower costs, but it also brings increasing complexity and a need for tremendous coordination," Kuehn said. "UPS is there to help by synchronizing the flow of goods, information and funds."

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