Value Capital Funding welcomed a new debt restructuring client.
The business is a four-decade-old family run business started by the owner’s dad. It is a free-standing roadside ice cream store/restaurant that boasts that they’ve served ice cream and food to the grandchildren of their original customers. Warm summer nights, good food, friends, and homemade ice-cream. It‘s an American success story if there ever was one.
Unfortunately, 2020 was a very tough year, and just before the outbreak of Covid-19 they rolled the dice and went big with a renovation of their building (inside and out). Because of Covid-19, they were forced to remain closed for a while, and when customers did return they spent less money and didn’t stay on the premises. Complete dinners (food and ice cream) became food or ice cream purchases. As a result, revenues were way down and their cash flow was erratic. All too often we see business owners like this use Merchant Cash Advances (MCAs) and high-cost lines of credit to try and get through difficult times, and that’s what happened here.
The owner’s daughter, who also works in the business, has a great eye for social media and has made quite a few of their menu items go viral so business is picking up and getting back on track. They came to us because their expensive LOC & MCA debt payments were killing them. They had $190,000 in MCA & LOC debt on their books, and it was costing them more than $13,592 a week (paid daily), or over $58,444/month to service this debt and they were starting to get behind in their payments. Not surprising as that’s an exceptionally high repayment schedule for their type of business, especially as it’s been so negatively impacted by the pandemic.
Within days of our initial contact with the business owner, the company already had a new repayment schedule that equates to only $6,948/week (paid weekly – not daily), versus the original repayment schedule of $13,592/week. The math is simple and very compelling. This family-owned ice cream/ restaurant business has lowered their debt repayments by $6,644 a week.
This business owner is ecstatic and he told us that he no longer has to panic every time the phone rings thinking it’s a collection call. He’s got the monkey off his back and can breathe again. He knows 2021 will be a very good year now.
Rob, our ISO who brought us the case, had seen us a while back in the NACLB DealMaker and reached out to us to become a partner. As you can imagine, he is very happy he did since he made cash out of what would have been a trash file. He is pumped and on the lookout now for other clients who are struggling to repay their high-cost debt.