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10-20-2014, 11:36 PM #1
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QUESTION: Is this "Not a big deal?" OR a "Deal Breaker?"
I have a client who has agreed to move forward on a decent sized offer. They are a Commercial Construction company on the upswing, depositing $150k-$250k monthly. The only problem for them, like many others in that industry is working capital. They don't want to turn down jobs but they must have x amount to cover costs, materials, payroll, etc. while they work their projects and wait to get paid.
They are agreeing to a Cash Advance/Loan for the immediate future. The (potential) issue is: they have also accepted a Factoring arraignment starting in about a month as a more long-term solution. They are a couple of days from funding and the client asked me if there is a conflict. Now, I am pretty sure that as long as the Lender agrees to take a subordinate UCC it is all good.........am I correct? I know it is not exactly apples and oranges but taking an Advance, and then Factoring is not stacking........or is it? Or is it a case by case issue? If a Lender who only does first position deals files a UCC can they/will they take 2nd position once the factoring comes into play? I am pretty sure I am going to find out tomorrow but I want to make sure I am correct in regards to how I move forward and how to approach the client with this. Any feedback is appreciated.
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10-21-2014, 08:37 AM #2
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- Mar 2014
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- Ann Arbor, Michigan
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Factoring lien positions
I ran two factoring companies and have experience with these situations.
Even if the advance company agrees to subordinate (meaningless if not in writing) you may run into a problem with the subordination language as has happened many times before.
My suggestion is to get hold of the factor and have them document their deal first including the filing of their lien if they haven't yet. I've seen too many deals fall apart not to be careful here.
Bob
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10-21-2014, 09:34 AM #3
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The client is contacting the Factor co. and we are contacting the Lender.........and yes, it is a language problem that is making the Merchant pause.
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10-21-2014, 12:49 PM #4
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10-21-2014, 01:18 PM #5
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10-21-2014, 10:54 AM #6
Fund the deal, then don't answer your phone.
Zachary Ramirez – CEO
Phone: 562-391-7099
Email: zach@zacharyjosephramirez.com
1661 N. Raymond Ave #265
Anaheim CA 92801
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10-21-2014, 11:55 AM #7
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10-21-2014, 12:44 PM #8
Hahahaha
Zachary Ramirez – CEO
Phone: 562-391-7099
Email: zach@zacharyjosephramirez.com
1661 N. Raymond Ave #265
Anaheim CA 92801
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