Hey DF,

I just came up for air... I am trying to get a few more deals closed before the end of the year. As I sit back and reflect on 2018 I am amazed at the craziness that has been going on in capital markets.

My job is to deploy capital to good customers....my bigger job is to make sure I do business with good customers that will pay us back. I have witness some madness this past year and though I would share one particular deal I said NO to that 4 other institutions said YES to without doing their homework.

Not long ago I was introduced to a manufacturing company that has been around for a while doing about $5mil a year in revenue. The Company had a small $500K line with a bank and stacked 3 advances totaling $250K. The Company claimed they had great customers and had around $1.2Mil in receivables outstanding. I had a nice conversation with the owner and asked for my typical list of financial data to review. It took some time to get the info and after 10 minutes of review....it was a NO.

The financials were internals and the AR detailed aging showed about 6 customers with most of the receivables way passed 90 days and the other two with little to no current AR. After researching the customers I discovered that they were companies owned by the owner of the Prospect that was referred to me. The other 2 companies were ghosts.

Some bank gave them a $500K LOC and three advance companies stacked on $250K without doing much work. What are the chances they get their money back?

-Know your referral sources
-Know you customers
-Know your sources of capital

Do you damn home work........