[TedFundy]

I have a client that I am trying to rescue as he digs himself a hole in quicksand.

They are a construction company with 100k in sales monthly.
Been in business since 2002.
No bank loans.
No IRS issues.
200k in AR (only about 60k is worth funding).

Here is the bad:

Prior to working with him, the owner made awful financial decisions.
5 MCA's in the past year Windset, Pearl, Knight, CAN, EBF. Only 1 is paid off and UCC is terminated.
The other 4 he is paying off as we speak.
Total he owes:
-112k
-59k
-39k
-30k
(That's $2,123 per day)

Only 2 out of those current 4 filed a UCC. Also, I filed a UCC in 3rd position.

I am trying to decide if I should even spend another second of my time trying to throw him a life line. Really nice guy and hard worker, but really bad with balancing his checkbook. My goal is to reconstruct this debt and factor his 60k in AR, but he has gotten denied twice already (Forward Financing and Funding Circle). Who would fund this?

I love coming on here reading posts. This is my first thread. Thought it was worth a shot.

[sigmundpannu]

Maybe you should use the search feature and put in consolidations as the search term. It'll give you a list of guys who do that. However with that many positions he better have some strong financials.

[Cfairbank]

Dan Page at FSP would be your best bet for consolidation here (but has to be profitable). If Dan doesn't work out, Bob Shaw will give you advice on viability of /options for of AR financing in return for a cup of coffee.

[bdshaw]

That's true adding cream and Sweet and Low please. I've raised my price to include a good prune danish but would be glad to help.
Bob

[bdshaw]

Ted, please allow me to give you some unsolicited advise.
Right now the total debt service from the advances is over 40% of the company's gross revenue and the total debt from advances are roughly 20% of gross revenue.
All this in an industry that averages about a 10% profit margin. Just paying out $40,000 a month with revenue of $100,000 leaves a negative monthly cash flow monthly of -$30,000.
Your time is more valuble then spending it here.
Even not,knowing all the financial facts I feel the company is due for a Chapter 7.
Please give me a call if you want to review the account. Good luck,
Bob Shaw
723-929-3800
rshaw@advancecredit.com

[Cfairbank]

Ted, please allow me to give you some unsolicited advise.
Right now the total debt service from the advances is over 40% of the company's gross revenue and the total debt from advances are roughly 20% of gross revenue.
All this in an industry that averages about a 10% profit margin. Just paying out $40,000 a month with revenue of $100,000 leaves a negative monthly cash flow monthly of -$30,000.
Your time is more valuble then spending it here.
Even not,knowing all the financial facts I feel the company is due for a Chapter 7.
Please give me a call if you want to review the account. Good luck,
Bob Shaw
723-929-3800
rshaw@advancecredit.com

And that's why you talk to Bob!

Gotta update my commission rolodex to include that danish!

[dpFund]

Thank you for the kind works Carl. I have consolidated a lot of construction companies and agree with Bob's assessment. The good news is that if I did consolidate him I could get his payments down to about one third of what he is paying today.

The bad news is that based upon industry average net margins (Bob nailed it at ten percent), the client could not afford it. So through his own making, he is on his way out of business. The only possible way out is if he has Real Estate he can leverage to refi and take cash out, stretching his payments out over many years. Not a WBL type loan, but more traditional long term. If he is lucky enough to be in that situation, I may be able to help. But it would be a stretch.

Nothing wrong with putting it out here on the forum Ted - this a good place to learn where the balance is of clients you should take on and those you should shy away from.

Best,

Dan Page
dan@fundingstrategypartners.com

[Michael I]

something doesn't make sense here . none of those lenders will put him paying at 47% of gross . which means one of 2 things . he funded multiple same day or business went tremoundalsy down .
consolidators can not either help because they wont give someone 250% of their gross . i am with bob time for chapter 7

[MoneyMason]

I have a funnel for clients that have poor cash flow due to MCAs. Let me know what you want for the lead. I have a partner that helps restructure their company, their debts, and their outlook on the future.

[TheShitzuofMCA]

I think at this point the guy is stacked to death. Chances are his company will not survive the 4 MCA collecting and he will need to keep taking mca/stacking to stay afloat. Based on his current situation you will not get the financial relief needed or the type of consolidation to bring this business back into being solvent. Either you keep stacking him and playing the game for how ever much longer the music plays or you can start to advise this guy on bankruptcy options. Its a prime example of irresponsible merchant meets broker who just wants to make money, any reasonable accountant or advisor would of said its better not to keep taking this money. So his MCA addiction is now malignant tumor.

[bdshaw]

Agreed. One of the problems many small buinessesvhave is that they are run,by experts in whatever they practice but no business or financial background. Add to the allure of throwing money at a problem and you have many failures.
Why more businesses like this don't seek out advice is best answered by shrinks although common sense let's you see what's probably happening.
Good call
Bob