[helpinghand]

Hey all,

Tricky one here, I appreciate any potential work arounds.

I have a client that is doing about $550k per month in deposits. Looking for $200-500k.

Here is the story:

He owned a business a few years ago that no longer exists, which had a big tax bill. He is working with his CPA to put together a payment plan. Meanwhile the IRS attached the business lien to his condo which has a significant amount of equity in.

This is coming up on some lender searches and I'm having a tough time finding a work around.

Will any of you take a look at this deal? I have proof that the tax lien is on the prior business and that the IRS attached the lien to his condo simply because of the tax bill on the prior company.

The current company is free and clear and does not have any tax liens. The current company also has a senior and secured factoring facility from a major factoring company, so obviously some due diligence has been done and is continuing, as the factoring company PROBABLY has tax lien monitoring in place. The factor funded his receivables as recently as last week.

Also given the factoring situation, a SMB loan will work better than an MCA (which amounts to a sale of the factor's security, which will cause issues).

Any and all suggestions/work arounds welcome.

[WhoisKingsley]

This is how an UW reads it

No current payment plan
IRS Lien on Condo - Assets are on lock. Which means there was some hefty tax/secure debt that needs to be paid
New company has factoring in place- Already sold the receivables/invoices.

Your wanting an MCA on the receivables in which the factoring company is already taking their %... which is probably pretty hefty since his credit and IRS situation...

Why does he need $200-300? Will this be used to pay the lien? How much is the condo worth?

[dpFund]

As a direct funder, I will volunteer that I would have the same issue as the other lenders you are talking with. The only possible way out is to pay off the IRS as part of the funding which may kill the deal, depending upon total amount of funding and the profitability of the current company. Doesn't matter if the lien was on a prior company. Your client still owes it and the IRS will eventually find his current company and put a lien on them (at least that is the way we would look at it). In either case, the individual is personally liable so his PFS will be shot to hell.

Case in point, we had to kill a deal at the 11th hour a few weeks ago because of this exact situation...we found a $1MM tax lien from a prior company that the owner "forgot" to tell us about.

Not sure if this helps but wanted to offer a third party opinion.

Dan Page

[Zach]

Does the owner have real estate? WBL is solid with tax lien situations.

[AdvanceFund]

Hey all,

Tricky one here, I appreciate any potential work arounds.

I have a client that is doing about $550k per month in deposits. Looking for $200-500k.

Here is the story:

He owned a business a few years ago that no longer exists, which had a big tax bill. He is working with his CPA to put together a payment plan. Meanwhile the IRS attached the business lien to his condo which has a significant amount of equity in.

This is coming up on some lender searches and I'm having a tough time finding a work around.

Will any of you take a look at this deal? I have proof that the tax lien is on the prior business and that the IRS attached the lien to his condo simply because of the tax bill on the prior company.

The current company is free and clear and does not have any tax liens. The current company also has a senior and secured factoring facility from a major factoring company, so obviously some due diligence has been done and is continuing, as the factoring company PROBABLY has tax lien monitoring in place. The factor funded his receivables as recently as last week.

Also given the factoring situation, a SMB loan will work better than an MCA (which amounts to a sale of the factor's security, which will cause issues).

Any and all suggestions/work arounds welcome.

If the current company does NOT have the lien placed on it then I don't see a problem funding with us.

[dpFund]

If the current company does NOT have the lien placed on it then I don't see a problem funding with us.

Dave -

If the client is named personally in the lien you are putting your capital at risk. I know everyone has different criteria...but thought you may want to consider that.

[AdvanceFund]

Dave -

If the client is named personally in the lien you are putting your capital at risk. I know everyone has different criteria...but thought you may want to consider that.

Thank you. If lien is also on the owner then we wouldn't be interested in funding. Strictly against the prior business we can work with.

[Davincinc]

llc, c-corp? How did the IRS attached the previous business to current one, this will dictate who will receive the deposit no?

[RichardGerard]

How long has the 550k per month firm been in business? Are they profitable? What are the assets on the balance sheet? As the IRS has attached to personal assets I'm assuming the debt relates to trust funds (941's) from prior business.

The ABL facility in place has purchased the receivables in question and has an assignment agreement in place - so they are covered.

Does the firm have inventory? Purchase Orders? Anything else valuable to extend the ABL past the receivables?

The question isn't who would give the client 200-300k on a small business loan- the question is why would they?

Having said that: if the client is growing- has opportunity to make that 550k a month to 800k a month, there are Funds we work with that will need to be Senior Secured that will buy out the Tax Lien, AND the ABL facility. The Capital won't be cheap, however it will be cheaper than Private Equity- especially if the Capital gets the client past critical mass.

Feel free to reach out to see if any of the above applies to your client..

Richard 516 510 3855

www.businesscapitalconsultants.com

775 Park Avenue Suite 255
Huntington, NY 11743

[helpinghand]

Hey all, thank you. We found a home. The lien was not attached personally and was born from activity in another business. Appreciate all of the insight here and will keep all you guys in mind for future dealings when we cross this similar situation.