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Financing Challenge:
An established Service Company with annual revenue of $11.5 million urgently needed working capital to satisfy past due obligations for sales tax and trade payables to critical suppliers. During the past 3 years the Company incurred losses totaling $2.8 million primarily due to non-recurring charges associated with a labor settlement, bad debt expense and buy-out obligations to former partners. At the end of 2009 the Company had a deficit net worth of $1.8 million.

The Company was fortunate to own the property on which its business operates. The Company had an existing mortgage of $2.8 million and approached its bank for an additional loan of $500,000. The bank not only turned down the request, but also asked the Company to reduce its loan balance by $800,000.

The Company approached a number of other banks for either a second mortgage of $500,000 or to refinance the first mortgage for $3.3 million but was turned down by all.

The Company was referred to Asset Enhancement Solutions, LLC for assistance.

Creative Financing Solution:
Asset Enhancement Solutions, LLC ("AES") initially explored getting the Company a Credit Card Advance which is an advance against credit card receipts received from customers in the future. Due to the Company's week financial position one lender requested a significant amount of additional collateral in the form of cash while another lender sought fees which equated to an effective interest rate of 42%. The Company turned down both of these offers.

In January 2008 the Company's property appraised for approximately $11 million. Although the value of commercial real estate has declined significantly since 2008, there was still a significant amount of equity in the property.

AES approached an aggressive private lender for the possibility of providing a small 2nd Mortgage against the property. Without requesting a new appraisal the lender agreed to do a 2nd Mortgage for $550,000. This Bridge Loan was interest only at 12% and had a term of 18 months.

This Bridge Loan in the form of a 2nd Mortgage gives the Company the time it needs to turn itself around

Neil Seiden, 516-767-0100

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