BHPH's paradox: every deal you write makes you poorer today. You put a $9K car on the road and get back $350/month for 30 months - profitable on paper, brutal on cash. A BHPH lot that sells well but can't fund its own growth is the industry's most common stall-out. Portfolio capital is how the lots that scale, scale.
The three ways BHPH dealers raise cash from paper
Most growing BHPH operations settle on the line-of-credit model: it recycles capital continuously (collect, borrow, stock, repeat) without surrendering the 18-24% yields that make BHPH worth its headaches.
| Structure | How it works | Trade-off |
|---|---|---|
| Portfolio line of credit | Borrow 50-70% against performing notes | Keep upside + servicing; audits and reporting required |
| Bulk sale of notes | Sell blocks of paper at 60-85 cents on the dollar | Immediate cash; you give up the yield |
| Payment-stream advance | Sell defined months of future payments | Keeps customer relationship; pricing varies widely |
Your collections ARE your credit score
Portfolio lenders underwrite one thing above all: how your paper performs. Delinquency percentages, charge-off rates, recency of payments, down payment averages, GPS/starter-interrupt discipline. A lot with 12% delinquency gets offered advance rates and pricing a 25%-delinquency lot can't touch. Before seeking capital, get your DMS reporting clean - the lot with organized collections data literally borrows cheaper.
The reserve rule
Seasoned BHPH operators keep 2-3 months of expected collections as a reserve before aggressive stocking. Repos cluster - tax season ends, plants lay off - and the reserve is what lets you ride a bad quarter without fire-selling paper at the worst price.
60-Second Funding Check
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BHPH-literate capital partners
Dealerun works with lenders who read a static pool analysis and know what a healthy BHPH portfolio looks like. Portfolio lines, bulk-sale introductions, and floor plans that coexist with your paper - one conversation.
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FAQ
How big does my BHPH portfolio need to be for a credit line?+
Meaningful lines generally start around $250-500K of performing receivables. Below that, growth usually runs on floor plan + retained collections until the book seasons.
Is selling notes in bulk a bad deal?+
It's a price, not a sin. Selling at 75-80 cents to redeploy into inventory that returns 30%+ annually can beat holding. Selling because collections are drowning you signals a servicing problem that discounting won't fix.
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