Merchant is doing $5MM in revenue with $1.5MM MCA's.
I had the merchant do a cash flow analysis with current MCA's and a second cash flow analysis doing a $2.5MM bridge loan to take out the 4 MCA's.
Here's a summary put together:
We are pulling together the items in your checklist and are just awaiting our final 2024 financials from our accountant, which should come any day now. We will upload our ’22 & ’23 tax returns as well.In the meantime, I wanted to get the attached in your hands to make sure the formatting and language for executive summary look good and see if any changes need to be made.
Couple of points on the pro forma’s:
"The first Pro Forma is our current situation with MCA’s and assuming no bridge/SBA
The second Pro Forma assumes bridge put in place 7/1/25 & and refinanced via SBA loan in 6/2026 with $2.5m SBA loan The Jan-April ’25 numbers are actual, which is why we highlighted those months. Everything May and on are pro forma
We just used our historic gross revenue monthly averages for the pro forma. We will likely come in higher but for the sake of this exercise, wanted to be conservative
As you can see, we think this is a no brainer as the interest expense will decrease by over 90% if we pull this off. Let us know your thoughts and we’ll clean up accordingly and get everything else in your hands.
"Executive Summary:"
XXXX is a nationally recognized provider on the advice &placement of sophisticated life insurance products/strategies to family offices/ultra-high net worth individuals/businesses.
Average financials over the last 4 years:- Revenue: $3,900,000- Net Income: $1,000,000 (which will be dramatically improved by debt refinance)- EBITDA: $2,500,000
Our current run rate for 2025 will place us over $5m for 2025. We have over $4m in our pipeline expected to close this year so should end at over $5m in 2025 revenue and expect at least the same in 2026.
We currently have $1,500,000 outstanding MCA balances at a payment rate of$14,119.48/day ($282,389.60 per month).
We are seeking a 12-month Bridge loan to pay off the MCA balance at an interest rate of 16% annualized. As shown in the attached pro forma, this will reduce our monthly interest cost by $ /month, a significant reduction that will help us rapidly buildup reserves.
Further, we will seek to exit the Bridge loan with a traditional SBA 7(a) loan for$2,500,000, which includes $1,000,000 for working capital.
We are expanding our business into new markets with additional agents and need additional working capital to hire additional case managers to service the added business, improvements to our technology platform and added marketing support to these agents.
The pro forma assumes the Bridge loan takeout in June of 2026, with the $2.5m SBA loan amortized over 10 years at a 12% interest rate. Post-SBA takeout our debt-to-income ratio should sit around 10% or less.
"From the lender:
Steve, Assuming no other debt, cash flow wise, 2.5 seems reasonable. 1.5MM to pay off the short-term bridge is a no brainer; we would just need to see the breakdown of the 1MM for working capital as per SBA.
We need to have a clear understanding of the working capital uses on file. They don't need to stay in the bridge for a year. I say 3 months then send it back to me to start the approval process. All available collateral will be used and if there is any collateral shortfall after that then they will just need to assign a life insurance policy over to us for the shortfall amount. That is a crazy amount of money per month for the mca's, how they are doing it is amazing.
And the next step:
From the bank:
They have to get that bridge first, get the MCAs off their BS, let the bridge increase the cash flow for three months then send them to me directly so I can start the approval process.
Steve Benjamin
Professional Business Loans
522 Contessa
Irvine, CA 92620
Broker, Underwriter, general business loan expert
949.228.1050
