Many business owners don’t know about factoring; even fewer people have heard about ARL. This will give you another option in your arsenal. ARL, with the right program, has a broader definition of receivables, more liberal underwriting requirements, and a way to accomplish many objectives for professionals and business owners, including wealth accumulation, retirement augmentation, estate planning, and possible asset protection. The loan payments may even be tax-deductible. So, how does an ARL program accomplish these objectives?

ARL unlocks the dormant receivables into a producing asset. It accomplishes this without changing any current billing practice. An owner may qualify for a loan up to 125 percent of his receivables. This amount is placed (duplicated) in a product that grows tax-advantaged (annuity or universal life product). Since the amount paid on the loan is simple interest, and the amount received is compounding interest over many years, the owner/partner/professional will increase his retirement income.

Here are a few key differences with ROI's program that sets it apart from other leveraging programs, typical commercial loans, and factoring:

No personal guaranty required.
The lending company will take 2 nd position on receivables.
Partners of a company who do not want to participate will not impede others from participating.
Receivables used for ARL have a more liberal definition than the typical commercial meaning. Professionals, independent contractors, and all entities with a corporate structure with money owed to them may qualify to leverage their receivables.
A company that exclusively lends on accounts receivable may leverage.
The loans are renewable, long-term, interest-only loans (10 years).
Let’s look at cash distributions and cost for a prospect with $300,000 in receivables:

With ARL

Owner 45-year-old male (retiring in 20 years – age 65)

Aged A/R Amount $300,000

Amount Leveraged $300,000 (in a universal life policy)

Policy Premiums $150,000 (placed in policy for 2 years)

Year 1 Death Benefit $2,827,000

Annual Program Cost $20,010 (interest-only payments at 6.67 percent)

Annual Distribution $66,000 (crediting rate of 6 percent)

Start Distributions At age 65 for 20 years

Total Program Cost $400,200 (less if tax-deductible)

Total Distributions $1,320,000 (tax-advantaged)



Do you see the power of compounding interest with other people’s money over time?

You may be asking yourself how the principal gets paid if it is an interest-only loan.

The business owner has a few options, but one strategy would include paying principal back within a few months after retirement.