Accounts Receivable Financing Programs

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    Larry Walker


    The concept of financing accounts receivable is simple enough. A simple interest-only loan, secured with a UCC-1 lien, is made against the value of the accounts receivable of a business. The loan proceeds are distributed to the business owner who invests them into either an annuity contract or life insurance policy. The lender may also take a lien against the annuity or life insurance policy as additional security.Accounts receivable financing has two primary goals. One goal is the financial goal of generating additional income by arbitraging the compounded tax-deferred gains earned in the annuity or life insurance policy against the simple interest paid on the loan against the receivables. The other goal is to protect the accounts receivable by effectively “equity stripping” the asset by way of the UCC-1 lien.

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