Based in New Jersey, Eugene (Evgueni) Maftsir has a background in Russia and presently directs Elbron Holdings. Areas of focus for Eugene Maftsir include commodities trading and derivatives. He has a strong knowledge of the various types of financing arrangements.
When seeking capital financing, one basic distinction is related to cash-flow versus asset-based business loans. The latter are secured loans that have the liquidation value of owned assets as collateral. Such assets can include inventory and accounts receivable, as well as real estate holdings, equipment, and vehicles. For businesses with sound credit ratings, the amount of secured loan typically ranges from 75 percent to 90 percent of the collateral assets’ face value. If the borrower fails to pay the loans, the lender places a lien that allows assets to be acquired and sold, up to the default amount.
By contrast, cash-flow-based loans are based on a company’s projected future revenues. As no physical collateral is involved, credit ratings are a fundamental part of the lending decision process. Underwriters also examine enterprise value and EBITDA (earnings before interest, taxes, depreciation, and amortization), and use a credit multiplier to account for risks related to economic cycle and sector trends. One drawback of this type of loan is that interest rates tend to be higher than with asset-based loans.
