[abcloser]

What would you do ?

I have a merchant who owns a few surgical centers. Rev between their accounts is $2-2.5mm with $7-8 mm in AR

Merchant has approx $1.7mm in mca debt and **** credit. Wants to get rid of his mca debt potentially using his AR but if using a factoring company , their ucc would need to be subordinate, which no one is okay with. No SBA and doesnt want to use property...yet. So im dead in the water I think

What would you guys do ? Any direction you guys suggest I look into ?

Thanks

[Olderguy]

$1.7M in MCA and doesn't want to use property or look at SBA. He clearly doesn't seem to know how to run his business and it's too bad he isn't interested in listening to serious options. Especially when they say "I don't want to use...(I'd look into finding another client....LOL)

You need to look at his financials, A/R aging, A/P and SREO.

Use cash out property to take out enough MCA debt to allow factoring to take out the rest of the MCA UCC's. I'd try Alleon for that.

Reach out - I can help with both...

Then fix his financials using my accounting team to get him $5M in SBA 7A. (yes, he's a knucklehead)

(What do I know...I'm just a loan officer)....

[Yankeeman07]

What would you do ?

I have a merchant who owns a few surgical centers. Rev between their accounts is $2-2.5mm with $7-8 mm in AR

Merchant has approx $1.7mm in mca debt and **** credit. Wants to get rid of his mca debt potentially using his AR but if using a factoring company , their ucc would need to be subordinate, which no one is okay with. No SBA and doesnt want to use property...yet. So im dead in the water I think

What would you guys do ? Any direction you guys suggest I look into ?

Thanks

I 2nd what Steve suggested - Alternative, walk your potential client to the mental doctor

[Kevin Henry-Seacoast]

What would you do ?

I have a merchant who owns a few surgical centers. Rev between their accounts is $2-2.5mm with $7-8 mm in AR

Merchant has approx $1.7mm in mca debt and **** credit. Wants to get rid of his mca debt potentially using his AR but if using a factoring company , their ucc would need to be subordinate, which no one is okay with. No SBA and doesnt want to use property...yet. So im dead in the water I think

What would you guys do ? Any direction you guys suggest I look into ?

Thanks

A couple of items:
-Deposits are sub $3Mil. What is monthly revenue? 7-8Mil of AR seems high unless the revenue somewhat matches.
-Why would a subordination be needed if the MCAs are paid off? Typically the factor would be in first lien position and others would subordinate to the factor.

We don't factor medical receivables. There are a few companies out there that do, but as described makes no sense thus far and somebody needs to look at income statement, balance sheets, and run a lien search.

[Ehenek]

Cant factor because he has 1.7mil in MCA and that has a 1st lien on their UCC's. I would like to look at this wholistically. I might be able to find something I MIGHT.

[Olderguy]

Cant factor because he has 1.7mil in MCA and that has a 1st lien on their UCC's. I would like to look at this wholistically. I might be able to find something I MIGHT.

What I'm suggesting if you do a partial paydown the MCAs with hard money property loan so I am thinking the A/R factor will work with the hard money buydown. I just don't know what that number would be. Buy it down to the amount the factor can say "Ok I can factor this amount to take out these remaining UCC's" I'd have to have a factor look at the A/R and UCC's and give me a number - dollar amount they could use to factor, and pay down the MCA's to that amount.

Here's what I need:

Business Information

A document that confirms your business name, structure, and ownership. Typically, registration papers from the state that you registered the company.
A copy of the driver’s license of the owner(s) of the business. This is used to confirm your identity and is needed for our files
Completed and signed Certification of Beneficial Owner(s) (Click here to download)
Financial Reports

Please note updated versions of these items may be requested again closer to closing.

Accounts Receivable Aging Summary and Detail report
Accounts Payable Summary and Detail report
Profit & Loss Statement and Balance Sheet (most recent quarter and year)
Your last fiscal business income tax return.
If you are a new business and did not file a business tax return last year, please provide a copy of your personal federal tax return.
Business bank statements for the past three to six months.
A document that confirms that your payroll taxes are up to date.
If you do not have employees, this is not necessary.
If you use a payroll service, ask them to email you a copy of your most recent 941 and proof of payment. You may already have a copy in your files.
If you do not use a payroll service, please provide a copy of your most recently filed 941 form and a copy of the check (or check stub / bank statements)

And a schedule of liabilities showing all the MCA's with UCC

https://drive.google.com/file/d/18Hz...ew?usp=sharing

I have a medical factoring company I am affiliated with and I can have them review this.

[Sachip24]

The factor would pay off his mca's if he has 7-8mil on the AR you would not need to subordinate anything. something is not adding up here

[abfunders]

7-8mm in medical debt is claims. They probably correct 30% of that amount at most. WBL would be a good option for the RE, don't you think?

[abcloser]

The factor would pay off his mca's if he has 7-8mil on the AR you would not need to subordinate anything. something is not adding up here

This is what I'm trying to accomplish. The reason the ucc would need to be subordinate is because he has a $14mm loan with some credit union and they have a senior lien

[abfunders]

This is what I'm trying to accomplish. The reason the ucc would need to be subordinate is because he has a $14mm loan with some credit union and they have a senior lien

How much equity is available in the RE? I'm not sure that there's very much, and the credit union has $14mm, which definitely includes the AR. Squeezing out $1mm out of the real estate with WBL might be a way out, IF there's enough equity. There is one lender I know of who can factor in a 2nd position, but they'd have to take out all of the MCAs, the question would then be.... how much is left for working capital or are they just digging themselves into a deeper hole? These deals often are too complicated before they're in too much MCA debt before people with level heads prevail.

[Olderguy]

Move on....doesn't want to use property....guy is in over his head.

[Sachip24]

This is what I'm trying to accomplish. The reason the ucc would need to be subordinate is because he has a $14mm loan with some credit union and they have a senior lien

got it..is it an all asset lien? the credit union maybe willing to do a carve out on the AR so you can get it done. Equipment financing deal could also possibly work if he owns his equipment free and clear

[abfunders]

got it..is it an all asset lien? the credit union maybe willing to do a carve out on the AR so you can get it done. Equipment financing deal could also possibly work if he owns his equipment free and clear

The other problem is the OP pointed out that he has really bad credit, so equipment financing is going to be difficult, even if the credit union doesn't have a blanket on that, too, which is doubtful. Hate to be pessimistic, but we have to know our limitations.

[abcloser]

got it..is it an all asset lien? the credit union maybe willing to do a carve out on the AR so you can get it done. Equipment financing deal could also possibly work if he owns his equipment free and clear

Equipment financing was my first option. 5 mins into the call they say oh you have a senior lien ? yea we cant come behind that. Credit Union supposedly cant carve out AR and looks to be a blanket. Trying to find some factoring company thats comfortable with using AR and coming behind the cu

Thanks guys! Appreciate the creative thinking

[abfunders]

Email me, I'll introduce you to a lender.

[Ehenek]

I have a few ideas. If youw ant to discuss feel free to reach out.

[Sachip24]

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