Acquisition vs. Contract Financing

Discussion in 'Other Brokered Products in the ABF Community' started by Sharmaine Ridley, Mar 17, 2016.

  1. Sharmaine Ridley

    Sharmaine Ridley Newbie IACFB Member

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    I need help with a commercial janitorial company in Virginia.
    My customer is the buyer who purchased the company and was set up on monthly payments of 8k for 3 years and now the seller wants to accelerate the monthly payments to get the balance in full if possible for family reasons. The problem is my buyer's credit (Current chapter 13 bankruptcy and personal tax lien). The company he purchased is strong financially and doing $600k per year in receivables and has no debt with strong financials, great business credit, and current on all taxes. Where would you consider sending this deal? What type of loan do you recommend? My buyer has no personal assets so SBA was shot down. I need it closed asap.
     
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  2. Tina Stewart

    Tina Stewart Newbie IACFB Member

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    The primary issue is not where to take this, the primary issue is why is the seller trying to circumvent the terms and conditions of the vendor take back and why should the borrower incur debt to address the sellers personal financial situation? How will the borrower benefit from this arrangement?

    The first thing I would do is create a consulting and fee agreement. I would then get access to the original agreement to purchase and sale and analyse the terms and conditions of the vendor take back and balance owing. If you need to factor invoices in order to accelerate payments then I would restructure the payment terms so that the seller is absorbing the liabilities that the borrower needs to incur to finance this payment arrangement. Alternatively you can reach out to the seller and work with them to do an private equity take out on their property to address their debt or line of credit.

    If the borrower cannot benefit financially by this arrangement and there is no conditions in the purchase agreement that indicates that the seller can manipulate the payment schedule then I would tell them to look at other needs to address their personal debt.
     
  3. Mark & Alarice

    Mark & Alarice Newbie Registered Guest

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    If the buyer is bringing in 600k in receivables, how come the buyer doesn't take care of the tax lien and bankruptcy? The buyer should hire a attorney for advice to restructure their agreement. I think the seller knows about the bankruptcy and tax lien, he/she is afraid of not getting all their money, so the seller is trying to get his/her money sooner than later. I imagine the tax lien is in the six digits. Another problem is how much of the 600k receivables can be liquidated to pay the taxes and seller at the same time. Good luck finding someone who will work with a deal involving bankruptcy and a tax lien. If the tax lien isn't taken care of in certain amount of time the IRS start the Levy process. Here's some information I got online. Hope it helps.
    How a Lien Affects You
    • Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.
    • Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit.
    • Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.
    • Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.
     
    Last edited: Apr 9, 2016
  4. Mark & Alarice

    Mark & Alarice Newbie Registered Guest

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    Here's someone you can talk to about your deal. CV Credit Inc. Carolyn McClure Ilic (VIP of Business Development - Chicago Office) Phone: (305) 792-2366 - cell: (312) 804-9072 - fax: (305) 792-2472. email: cmcclure@cvcredit.com - website: www.cvcredit.com
    CV Credit is a direct lender, we are focused primarily on Invoice Factoring but we will consider Purchase Order Funding and Asset Based loans for our existing clients. Our ABL program is for AR and some inventory.
    What sets us apart from everyone is that we can fund cross border transactions between North and South America as well domestic Mexican, US and CAN transactions. CV Credit also offers Supply Chain Finance for cross border transactions and has a strong appetite for the seafood industry and PACA transactions. Our rates are very competitive for companies with annual sales from $600,000 to $50,000,000. We cannot factor construction or 3rd party medical but I can gladly refer you to someone that will!

    Mark & Alarice
    amcashnow@gmail.com
    www.cash4yourbiz.net
    www.amcashnow.com
     
    Last edited: Apr 10, 2016
  5. thomasina

    thomasina Newbie Registered Guest

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    Hello Sharmaine, were you finally able to have some success with this client. I will be calling you so that we can brainstorm 2017 goals.
     
  6. Sharmaine Ridley

    Sharmaine Ridley Newbie IACFB Member

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    Yes. I did. Ok Perfect talk to you soon.
     

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