Business Owners

Solutions for Business Owners

The Tight Credit Market...

It is certainly no secret about the current economic downturn. Along with it has arrived a credit squeeze, making it more difficult for many businesses to borrow the funds needed to run or expand their businesses. What surprises many is the fact that it is affecting solid businesses with stellar credit.

In every economic climate, there are opportunities. Steve is currently launching new programs to aid his clients with bridging this turbulent economy.

These are unusual times.

"Like a high-stakes game of chess"

Through these Distressed Business Solutions efforts, Steve is working with CPAs, law firms, lenders, managers of Hedge Funds, Fund-of-Funds, Pledge Funds, and venture capital firms, to match them with appropriate businesses in need of financing options.

There are several options which can be explored. Some are common-place and have been employed during both good and bad times. Others are only now gaining status as viable solutions.

Note: If you offer funding sources, or are looking to invest,

contact Steve Herb.or by phone at:

740-334-1018

Step number one: Do not bury your head in the sand.

The problem will not solve itself.

Step number two: Seek help.

Call your most trusted advisor; your CPA or your attorney, to determine how critical your situation is, and how much time you have to work with. Then contact Steve to see if any of his resources and solutions may help. The conversation is free, and you won’t know unless you call.

Step number three: Reduce Overhead:

The most obvious next step is to cut all unnecessary overhead. No secret weapon here, but it needs to be handled.

Options in This Turbulent Economy:

There are numerous methods for raising funds for businesses and property owners.
Some will act as a short-term bridge for a few months. Other options can help span years until the business and economy regains strength.

Option: Turning Receivables into Cash...Factoring Receivables:

Factoring is a tried-and-true method often used by businesses of all sizes. It isn't for every business, and it isn't for every type of receivable, but may be worth exploring for a short-term cash infusion.

Note: "Asset-based lenders" work with a company's receivables also, but by lending against the receivables instead of taking possession of them.

Option: Alternative Funding Sources:

Steve is currently building relationships for alternative types of funding, such as with non-traditional lenders, venture capital funds and pledge funds in order to offer opportunities for both sides of this industry; owners and investors.

Option: Sale-Leaseback:

A Sale-Leaseback is where the current property owner sells the real estate to an investor, and under a lease which was negotiated at the time of sale stays on as a tenant in the property.

A Sale-Leaseback is simply reversing the buying decision and moving the owner into the role of a tenant. Keep in mind that leasing is an alternative means of financing. Other than the "Pride of Ownership", there are few, often no, downsides to leasing. There are actually tax advantages to leasing over owning. (be sure to consult with your tax consultant before taking any action.)

Option: Short Sale-Leaseback:

By combining a Short Sale with a Sale-Leaseback, we can resolve the unfortunate economics of being upside-down on a property which no longer is worth nearly what is owed.

This can be an excellent option for the owner who might be able to afford a lower monthly cost, but simply not the full, present mortgage(s) on the property.
Be aware, with a short sale, your credit is going to take a severe hit, but it probably will anyway, based on the situation you are sliding into. One "good news" might be that so many are losing good credit standings that the new normal credit score may actually drop to lower standards. In other words, lenders need to make loans, and if you can offer a reasonable explanation, along with making demonstrated progress towards responsible financial management, you should be able to reestablish credit within a shorter time frame than in previous times.

Option: Have an Investor buy the business property's mortgage note:

An option for substantially reducing the costs of owning the bricks and mortar of the business might be to have an investor negotiate with the current lender to buy the promissory mortgage note from the current lender, at a substantial discount.

Properly done, at that point, the business owner would owe the new lender/investor a much lower amount, which of course would translate into a much lower monthly amortized loan repayment.

So, why would a commercial Realtor be speaking so openly about the financial crisis we are facing? After all, isn't a broker in business to "do deals"? The honest answer is, Yes, he makes money only when a deal is done. However, his clients retain him because of his market knowledge, network connections, and his creativity.

In short, to solve clients' problems.