[davedamoneyman]

Hi everyone,

I’m working on a construction deal with a merchant consistently generating about $700K a month. He is seeking a $300K term loan. The only collateral he has is his primary residence, valued at approximately $1.1M. Additionally, he has about $3.1M in receivables currently under contract. If anyone can assist with this type of financing, it would be greatly appreciated

[abfunders]

"Receivables" or "Under contract"? Meaning, does someone owe him money for work done, or does he need capital to get the job started? Two very different things. Ignore what the client thinks he wants, there's actually way better products out there for this than a classic term loan in this instance. Easy to sell, just have to pitch it to the merchant. I love these types of deals.

[BIG_DEAL]

What state is the property, what is the amount owed via the currant mortgage, and est credit score?

I'm working with a mortgage company who does 15 - 30 yr terms, true apr etc etc

[davedamoneyman]

Thank you for the response. To answer your question, the $3.1M is currently under contract which he is collecting on.

[davedamoneyman]

Property is in TX and he owes about 600k. Credit score is above 720+

[abfunders]

Thank you for the response. To answer your question, the $3.1M is currently under contract which he is collecting on.

He did $3.1mm of work and he didn't collect on any of it? He clearly needs a construction factor here, but it's hard to imagine that he completed $3.1mm of work and didn't collect a good portion of it already. Reach out, I'd love to help here.

[Kevin Henry-Seacoast]

He did $3.1mm of work and he didn't collect on any of it? He clearly needs a construction factor here, but it's hard to imagine that he completed $3.1mm of work and didn't collect a good portion of it already. Reach out, I'd love to help here.

Need to look at the AR Aging because something does not make sense. The prospect is billing $700K/month and has $3Mil of AR outstanding. A bunch of that AR must be over 90 days and likely ineligible.

[abfunders]

We can stop speculating, the AR is from private home builders. It's all private and none of it is factorable. He's a general contractor for luxury home building. He does a lot of homes at once and he gets paid in chunks. I appreciate the call OP.

[Olderguy]

Just FYI...any factoring A/R that is over 90 days goes back to the merchant to collect.

[Kevin Henry-Seacoast]

[QUOTE=Olderguy;193817]Just FYI...any factoring A/R that is over 90 days goes back to the merchant to collect.[/QUOTE

Not in all cases. It depends on the terms of recourse and if it's a recourse or non-recourse deal. If it's non-recourse the factor owns the invoice and the risk is on the factor. Recourse: If the terms of recourse are 60 days past due date the invoices can go past 90 days to the terms. If they do extend past terms the invoice is sold back to the company or replaced with another invoice. If a % of all invoices with the end customer go past recourse date-all invoices may become ineligible.

[abfunders]

Just FYI...any factoring A/R that is over 90 days goes back to the merchant to collect.

To add to what Kevin said, there are 1 or 2 banks that can go out to 120 days. However, I haven't found anyone that will buy invoices that are already aged more than 60 days to get the line started.

[Kevin Henry-Seacoast]

To add to what Kevin said, there are 1 or 2 banks that can go out to 120 days. However, I haven't found anyone that will buy invoices that are already aged more than 60 days to get the line started.

Correct. If the terms with the end customer are N60, N90, and even N120 we can certainly accommodate for the right customers and a timely recourse period post term date. The reason some non-bank factors cannot go past N90 is because of the limitations within their credit policy and line with THEIR lender. Some lenders that lend to or re-factor other factors do not allow them to go past 90 day recourse regardless of terms with end customers.