Commercial Insurance Agency
A commercial insurance agency approached us for working capital. He had mortgaged his home, run up his credit cards and was at the end of the personal usage. Although he represented a specialty in the industry that was not being properly serviced, the collection time on the AR was 60 to 90 days. We were able to provide $50,000 of working capital through our sources to allow him to fund his operation and continue on the path of success.
In the general world of banking, a person who owns commercial real estate can only refinance the property if they have excellent credit, strong cash flow and business assets. Our client was hampered by the current bank loan that encumbered all of the business assets, consisting of $300,000 in AR, $1,000,000 in inventory and $450,000 in real estate. In addition to this, the client had a loss history on the business. We refinanced the real estate at a reasonable rate based on the appraised value of the real estate, did not take any position in the business assets and relied on the projected income from the business going forward. We also provided a new line of credit for handling the accounts receivable of the company that sells to major customers, such as General Motors, who take 60 days to pay their bills.
After years of working in the industry, this enterprising hair stylist decided to get her own shop going. A series of lenders made promises of funding the venture, so she used her personal funds to commence the leasehold improvements and buy the equipment. Unfortunately, the bank did not come through with the loan and she had the shop almost completed but no money left to open the doors. We arranged to provide her with more than $30,000 to open the doors, hire the employees and enable it to grow.
We were approached by an entrepreneur who needed funding to open a party store. All of the traditional banks indicated that they would support her after two years of operations. This didn’t open the doors. We were able to arrange for $100,000 to start this business and get it thriving.
The owner of multiple convenience stores was entering the slower season for his one store in the “lake area” of Indiana. He had drained the cash flow of the business in an attempt to open another store, which was under construction at the time. He was loaned more than $150,000 to keep the existing store rolling through the winter months and to assist in the funding of the other location.
A well-established restaurateur was approached by his brother to start another restaurant in a nearby location. Startups are very difficult in this area, and it caused the owner to leverage his existing restaurants with various “cash” advances to fund the startup. This burdened the existing restaurant to the point that it was beginning to go cash negative. We shored up the bleeding with a more comfortable debt service on more than $300,000 in debts.
Rail Car Repair
It’s impossible to miss the seemingly endless line of rail cars when you are held up by the many trains that cross the highways of America. You likely haven’t thought about all the maintenance that must be performed on these cars’ frames, wheels, etc. A gentleman who had managed this type of business for major companies had an opportunity to purchase a division that was performing these repairs. They negotiated the purchase price for the business and all the equipment needed to continue the business. Upon signing of the Letter of Intent, the corporation fired the general manager of the place and a few other key people. This caused the sales to nosedive and the bank that was funding the deal to ultimately back out. We found an SBA lender that became the savior of the transaction and provided working capital as well.
When you suddenly see pop-ups in your web search, do you ever wonder how they were able to track the searches you made? A company that provides the IT support to companies that wanted this information was being turned away by the bank. It seems that unrelated to the business, the owner had lost money in some stock market trades that made the bank “nervous.” We reset the company with a new bank that provided a line of $150,000 and the promise of supporting the company as they expanded their base of customers.
A fashion designer was seeking a way to capture the sales of her unique clothing line in the form of retail and online sales. As she progressed through the myriad of banks, the common rejection theme was no real history in the business and no established retail location. She was not deterred, but was unsure of how to proceed with a lack of capital. We provided her lines that allowed her to draw up to $75,000 to fund this startup and the making of the clothing line.
A small church was meeting in a local YMCA. The Y had decided to sell the building and brought in a professional real estate group that worked on this for more than a year. Finally, the organization turned to the tenant, the church. We arranged for the purchase on a 70% LTV basis. The Y granted the church credit for some of the rent that was paid and the church brought the rest. This was funded through a traditional lending source that specializes in churches.
The business was nine months behind on rent and the landlord was moving to evict. Business had rebounded and increased but the owner just could not get a lump sum to catch up. Normal lending channels shied away due to this late payment history on the rent, slow personal credit and other reasons. We got him a loan to catch up and put some money in his pocket for new equipment.