Businesses inevitably encounter periods of financial or operational stress.
Whether due to market shifts, operational inefficiencies, excessive debt, or unforeseen events, these challenges are a reality of the commercial landscape.
The key to navigating these turbulent times lies in recognizing the warning signs early and taking proactive, strategic action.
For companies facing such difficulties, the prospect of formal bankruptcy proceedings can be daunting, often perceived as a last resort associated with significant costs, public scrutiny, and loss of control.
Let’s define out-of-court restructuring, identify the signals that might indicate a need for it, detail the operational and financial strategies involved, outline the typical process, analyze the significant advantages and potential risks, and underscore the critical importance of seeking expert professional advice.
Sleepless nights, constant worry, and the looming fear of not meeting payroll or paying suppliers are heavy burdens.
In these moments of desperation, the idea of a quick business loan can seem like a life raft in a stormy sea. "If I could just get an injection of cash," you might think, "everything will be okay."
It’s a natural reaction. We’re conditioned to believe that financial gaps are best filled with borrowed money.
But I want to share a crucial perspective, born from countless experiences of businesses navigating these treacherous waters: more often than not, a new business loan is a temporary band-aid on a deeper wound, and it can often lead to even greater financial distress down the road
This paper emphasizes the critical role of cash flow in business success and introduces the Cash Conversion Cycle (CCC) as an indispensable strategic tool that measures the time taken for a company to convert its investments in resources, primarily inventory, back into cash through sales.
The ultimate goal for businesses is to shorten this cycle, as a compressed CCC signifies rapid and efficient cash circulation, thereby improving liquidity and operational efficiency.
Beyond a financial calculation, the CCC serves as a gauge of a business's operational effectiveness in managing inventory, collecting customer payments, and handling supplier payments, with a shorter CCC indicating smooth and aligned core operations.
By understanding and optimizing the CCC, small business owners can gain enhanced control over their financial health and operational performance, enabling more informed decision-making.
Navigating business financing can be challenging, particularly when seeking long-term capital for growth without straining monthly cash flow.
This guide helps small business owners find financing with extended repayment periods and lower monthly payments.
We'll cover the basics of long-term loans, different lender types, government-backed programs, the trade-off between payment size and total cost, and financing application preparation.
The traditional path often leads to banks, credit unions, or programs backed by the U.S. Small Business Administration (SBA).
However, hitting a wall with these conventional lenders is a common and often stressful experience.
Even businesses that appear financially sound on the surface can face rejection.
Understanding why this happens and exploring the landscape of alternative solutions is crucial for navigating these financial hurdles and ensuring the business remains a going concern.
Reconcile your Merchant Cash Advance MCA contract and payments
HAVE YOU RECONCILED YOUR PAST AND FUTURE MCA CONTRACT PAYMENTS?
Over payments on your MCA contract(s) may be present right now.
Your business may be owed over payment credits or refunds.
YOU MAY BE OWED MONEY FROM MERCHANT CASH ADVANCE MCA COMPANIES!
STOP TAKING MERCHANT CASH ADVANCE (MCA)!
MCA-taking allows MCA companies to steal your top-line sales.
When you take an MCA, the “factor” rate that you pay is directly related to the amount of top line sales that you are giving away.
$100,000 MCA at 1.38x “factor rate” is the SAME AS IMMEDIATELY GIVING AWAY $38,000.
That is why you don’t have enough cash flow.
That is why you cannot afford the daily or weekly payments.
DEAL TABLE: $1,370,000 IN MCA LOANS PAID OFF TO A SHORT-TERM (18-MONTH) “MCA RELIEF” REFINANCE + $750,000 IN WORKING CAPITAL
SaaS and I.T. Cloud Services Company with Merchant Cash Advance MCA loans and other high-interest, short-term debt totaling ~$1,370,000.
The Company was paying ~$197,072 Total in monthly payments to MCA companies and short-term debt providers.
At closing, all MCAs were paid off for a discounted amount and zero-balance letters (ZBLs) were issued to the Company from the MCA loan companies.
The Company’s new TOTAL monthly payment is now $79,500 (payment reduction of over 60%, down from $197,072), and company was given $750,000 of working capital at closing.
It’s is extremely important to understand the true Cost of Capital when you are considering taking on any type of business debt financing.
This is the #1 reason that MCA loans destroy good, profitable businesses since MCA loan’s Cost of Capital is extremely high compared to all other business debt financing options.
DEAL TABLE: $500,000 IN MCA LOANS PAID OFF TO A SHORT-TERM (18-MONTH) MCA RELIEF REFINANCE + $100,000 IN WORKING CAPITAL
Real Estate Management Company with Merchant Cash Advance MCA loans and other high-interest, short-term debt totaling ~$500,000.
The Company was paying ~$134,972 total monthly payments to MCA companies and short-term debt providers.
At closing, all MCAs were paid off for a discounted amount and zero-balance letters (ZBLs) were issued to the Company from the MCA loan companies.
The Company’s new total monthly payment is now $64,000 (payment reduction of over 52%, down from $134,972), and company was given $100,000 of working capital at closing.
DEAL TABLE: $900,000 IN MCA LOANS PAID OFF TO A LONG-TERM LOAN + $500,000 IN WORKING CAPITAL
General Contractor and Builder with Merchant Cash Advance MCA loans and other high-interest, short-term debt totaling $900,000.
The Company was paying $123,842 total monthly payments to MCA companies and short-term debt providers.
At closing, all MCAs were paid off for a discounted amount and zero-balance letters (ZBLs) were issued to the Company from the MCA loan companies.
The Company’s new total monthly payment is now $48,612 (payment reduction of over 60%, down from $123,842), and they were given $500,000 of working capital at closing.
Business Finance & Strategy Advisors
Refinance. Restructure. Reorganize.
Help with Business Debt, Loans and Merchant Cash Advance (MCA)
