The company is an oil services company and was severely impacted by the decrease in oil demand as the country shut down in 2020 and many worked from home. The result was a sharp decrease in demand for oil. As time went on, their customers were slow to pay them and it caused a severe cash flow crunch for the company. All too often we see business owners turn to Merchant Cash Advances to try to get through difficult times.
Today, business is picking up and getting back on track, but they are playing cash flow catch up so they were having a hard time keeping up with their expensive MCA debt payments. The company had almost $460,000 in MCA debt on their books, and it was costing them more than $23,000 in weekly payments (paid daily), or over $100,000/month to service this debt. That’s an exceptionally high repayment schedule for a business, especially one so negatively impacted by the pandemic.
Within days of our initial contact with the business owner, the company already has a new repayment schedule that equates to only $11,072/week (paid weekly – not daily), versus the original repayment schedule of $23,400/week. The math is simple and very compelling. This Utah-based Oil Service company has relieved their debt repayment pressure by some $12,300+ per week. Additionally, the repayment term has been stretched out to more than 10 months, versus the shorter period usually associated with most MCA’s.
This business owner said he is ecstatic and no longer hiding every time the phone rings. He is optimistic again and looking forward to a great 2021.
Debt Restructuring was his only path forward since he was in default with one of his funding companies, had a big decrease in revenues and his FICO had suffered too. Their balance sheet was stacked with MCA debt, so he would be unlikely to qualify for affordable financing. With our help, he was able to right-size his existing debt payment for the new normal revenue environment he is in.
Jerry, one of the newer ISO partners who brought us this case, was about to move on when he couldn’t get them new financing but remembered seeing us in the NACLB newsletter and reached out to us. As you can imagine, he is very happy he did since he wound up monetizing his turndown.
“I’m going through my CRM to find more clients like them!” Jerry said.