[Always-closing]

have a merchant doing 3 million a mth looking for 1 million over 12 mths 1.35-1.40 direct lenders only merchant
is showing 2 million neg on balance sheet { he injected 2 million of his money into the business so the business owes him 2 million } any direct lender send me a message have all docs

[Zach]

Only WBL can fund something like that due to the poor financials. Based on that balance sheet they also don't have adequate collateral to qualify for an ABL.

Give me a call and let's review -- he probably owns some real estate we can leverage to get him the money he needs.

[bdshaw]

Humbug

[bdshaw]

Would your client qualify for an Asset Based Loan?
Bob

[RichardGerard]

I work closely with a Hedge Fund that can help- but they need to be Senior Debt- regardless of the Financials..
They will Underwrite the deal based on Liquidity and overall collateral. Typical terms are 12-18 months-more cost effective than what you describe.

Reach out if you would like some assistance..

Richard 516 510 3855

www.businesscapitalconsultants.com

775 Park Avenue Suite 255
Huntington, NY 11743

[Chambo]

have a merchant doing 3 million a mth looking for 1 million over 12 mths 1.35-1.40 direct lenders only merchant
is showing 2 million neg on balance sheet { he injected 2 million of his money into the business so the business owes him 2 million } any direct lender send me a message have all docs

Negative on balance sheet? Better talk to Zach, because NO WAY IN HELL is an A paper fund going to extend him $1million.....at ANY rate

[AlexSMF]

Negative on balance sheet? Better talk to Zach, because NO WAY IN HELL is an A paper fund going to extend him $1million.....at ANY rate

Chambo, there are exceptions to this. I funded a deal for 500,000 12 months @ 1.36 and the business was in a very similar position. Balance sheet was upside down by almost $2,000,000. The merchant had a very good explanation for it which made perfect sense. Cash flow was very strong and so was everything else about the deal. There are exceptions to this and there are 1 or 2 A paper funders out there that would do this.

[VFG]

If your client sells on open terms to commercial clients i may be able to structure a factoring facility on this scenario. Feel free to DM me if interested.

Good luck!

[aredmond]

Chambo, there are exceptions to this. I funded a deal for 500,000 12 months @ 1.36 and the business was in a very similar position. Balance sheet was upside down by almost $2,000,000. The merchant had a very good explanation for it which made perfect sense. Cash flow was very strong and so was everything else about the deal. There are exceptions to this and there are 1 or 2 A paper funders out there that would do this.

And someone probably got fired for authorizing that deal. I agree with Chambo, the company that funded that deal was not funding A paper....nobody 2 million negative on the balance sheet regardless of the explanation is "A" paper.

[AlexSMF]

And someone probably got fired for authorizing that deal. I agree with Chambo, the company that funded that deal was not funding A paper....nobody 2 million negative on the balance sheet regardless of the explanation is "A" paper.

The owner of the company authorized the deal because the story made perfect sense. 99 out of 100 times, chambo is right as it comes to this scenario, however there are exceptions if you happen to come across the right situation. I think I would know more about the circumstances of this as it was my client compared to you going based on assumptions, no?

[Chambo]

Chambo, there are exceptions to this. I funded a deal for 500,000 12 months @ 1.36 and the business was in a very similar position. Balance sheet was upside down by almost $2,000,000. The merchant had a very good explanation for it which made perfect sense. Cash flow was very strong and so was everything else about the deal. There are exceptions to this and there are 1 or 2 A paper funders out there that would do this.

OK, but this is twice as much money

[bdshaw]

Welcome to the world of ABL people. From our point of view a deficit worth because of debt owed to the owner will not have a significant effect. Of you would like an explanation please feel free to contact me.
Bob

[RichardGerard]

I've seen situation like Alex describes numerous times.. No disrespect to the knowledgeable folks on this thread: If there are assets that are leverage-able - and not encumbered by a UCC (or have a UCC that will subordinate) there are many things that can be done.

[bdshaw]

Richard is correct. An underwriting problem in this space may not be one at all in another.
I've also seen and done deals referred from here that looked hopeless as some form of advance.
With all of the talk about the shrinking industry and profits available I would think it would behoove the sales folks to look beyond Advances and learn more about traditional commercial finance. After all, this is the cream of the crop.
Bob

[VFG]

When the company has debt owed to the principals we typically have them subordinate their position and is not counted as part of the liabilities for funding purposes. Might be a deal worth structuring under abl of factoring if it makes sense.

[Cfairbank]

I've seen situation like Alex describes numerous times.. No disrespect to the knowledgeable folks on this thread: If there are assets that are leverage-able - and not encumbered by a UCC (or have a UCC that will subordinate) there are many things that can be done.

You guys should definitely leverage Richard G on this one. He possesses superior knowledge on the larger or more complex deals that aren't suited for MCAs or short term loans. He can help you get something done when there are seemingly no available options.

[bdshaw]

I agree with Carl that Richard knows his stuff.....very well. However stating that these deals are more complex is just not correct. These deals are just different. They fall into a different finance space then you usually see here. There are several of us that have the expertise to analyze these deals quickly and for us rather effortlessly.
Just like math 101, if you think it's complicated........it is.
With the angst about the industry opportunities shrinking I would seek out one of us and expand your abilities to spot other types of deals.
For the record I would not hesitate to refer anyone to Richard or several other folks here.
Bob

[Kevin Henry-Seacoast]

Not true Zach.... Just because the Company has a negative equity position due to an owner note doesn't mean the Company does not qualify for ABL. First off....we clearly do NOT know enough about the business to determine what they qualify for. 2nd....if the owner has a note on the balance sheet it will more than likely have to subordinate to any new senior lender, thus being treated as equity until the new senior lender is paid off.
I would need to learn more about the business to determine what the Company qualifies for..... ABL and Factoring at an effective cost of funds could make a lot of sense if there are some lendable assets.

[Zach]

I agree with you guys, it's possible there could be some assets to lend against. One thing to note is that, per the original post, the client is negative $2MM on his balance sheet and he lent $2MM to the business.

This screams to me that it is unlikely he has any significant unencumbered assets... And definitely not enough to qualify for the $1MM he is seeking. Hopefully he has some personal real estate investments to capitalize.

(Unless someone here wants to lend on his equity in the business ;-) )

[Kevin Henry-Seacoast]

I agree with you guys, it's possible there could be some assets to lend against. One thing to note is that, per the original post, the client is negative $2MM on his balance sheet and he lent $2MM to the business.

This screams to me that it is unlikely he has any significant unencumbered assets... And definitely not enough to qualify for the $1MM he is seeking. Hopefully he has some personal real estate investments to capitalize.

(Unless someone here wants to lend on his equity in the business ;-) )

Zach,

If the Company is doing $3mil/month with commercial customers on terms, I bet they have at least $4mil in accounts receivables outstanding. Again...we don't know this as we have been given no info about the Company.

[VFG]

And maybe another $3MM in inventory and who knows if some equipment as well. Open purchase orders which can also be funded. We take all these items as consideration, not just how the balance sheet looks.

[Zach]

I understand he probably has inventory or A/R, but he is negative $2MM, meaning that he probably has liens against all of it.

Kevin is correct, we don't know for sure, but I would guess that everything is encumbered.

[Kevin Henry-Seacoast]

I understand he probably has inventory or A/R, but he is negative $2MM, meaning that he probably has liens against all of it.

Kevin is correct, we don't know for sure, but I would guess that everything is encumbered.

Zach,

Not necessarily true. You can have a negative equity balance sheet with unencumbered assets. We see it all the time. The reason the balance sheet is showing negative equity is because of the shareholder note. Most senior lenders would view this as equity as the shareholder note would have to subordinate to the lender. It would still show up on the balance sheet as debt, but so long as it is subordinated behind the senior it is treated as equity.

[AndyYSCISOdept]

Zach,

Not necessarily true. You can have a negative equity balance sheet with unencumbered assets. We see it all the time. The reason the balance sheet is showing negative equity is because of the shareholder note. Most senior lenders would view this as equity as the shareholder note would have to subordinate to the lender. It would still show up on the balance sheet as debt, but so long as it is subordinated behind the senior it is treated as equity.

Agreed....underwriting is a subjective art based on your preconceived risk profile. Leet us fund that which we deem worthy and decline the rest!!

[WhoisKingsley]

have a merchant doing 3 million a mth looking for 1 million over 12 mths 1.35-1.40 direct lenders only merchant
is showing 2 million neg on balance sheet { he injected 2 million of his money into the business so the business owes him 2 million } any direct lender send me a message have all docs

Instead of putting "Direct Lenders" only, why don't you also request an overview of the file to see if it would qualify and whom? Doesn't mean stealing or taking commissions off of the deal. The information provided is just a snapshot to attract a source- I can easily assist you in reviewing and directing you towards any of the below that shot their hands up!