Monday, October 28, 2019

My Bank Called My Line Of Credit…Now What?


This is a very real problem that has occurred to many of our clients...and you might want to give this some serious thought...Proper planning will help you avoid panic.

An unsecured business line of credit gives your business access to cash on demand.  It offers you a flexible way to borrow money.  BUT what happens when the bank unexpectedly calls (or pulls) back the line...and in doing so the bank is effectively cutting off access to your working capital.  Well, you are not this predicament is, unfortunately, too common.  The stories we have heard from our clients/business owners are ones of complete horror...stories of banks pulling their lines or capping their existing credit.

...and here are some examples of quotes in this article written by Julie Bennett of, when writing about small business owners whose lines were pulled:

“I was suddenly working without a safety net”   
“It drives you crazy. I'm doing a good job, I'm still making money...but then they do this, anyway?" 
"If I can't find a new bank to take on this credit line, I will be forced into bankruptcy” 
Having $7,500 in reserve really helped. In case a check didn't go through from a client, it was there to rent studio lights or pay my cell phone bill."

"A few years ago, losing a line of credit was a crisis--today, it's the new normal,"
Losing credit suddenly can devastate a small business operation.  Banks pull credit for a number of reasons.  For example:

  • Your bank may have been acquired by a larger bank
  • A review of existing accounts may reveal an undesired risk
  • Stricter underwriting standards
  • Underused credit line
  • The business may be experiencing instability (partner left, assets may have been sold, etc.)

If your LOC was pulled and you don’t have reserves (or a plan), you need to make changes and act fast:

  • Have an emergency meeting with your CFO and/or accountant to devise an action plan.
  • Follow up with a management meeting.
  • If you don’t have a CFO because the cost is too high, hire the services of a virtual CFO or business consultant
  • Discuss the possibility of bankruptcy protection with your attorney.
  • If you need bridge financing, don’t react…make sure it’s planned out (it is always a good idea to work with a business consultant that you can trust to provide guidance in times of need).  Understand the costs and plan an exit strategy
  • Look into the possibility of a private investor or an equity partner

If your business has a LOC that you depend on, there are some steps you can take to minimize losses:

  • Establish a relationship with a local credit union.  Have an open discussion about capital financing products.
  • Check your FICO score and take necessary steps to improve it.  This may require hiring a professional.
  • Establish a reserve account that you can use in case of emergencies.
  • Establish an invoice factoring agreement where you can select the invoices you factor.
  • Have regular and periodic meetings with your management team to always review contingency plans.
  • Ensure you have an accurate and recent third-party business evaluation.

In short, if your LOC was pulled or the bank called your loan, don’t wait.  Seek help immediately.  Contact us at

Monday, September 30, 2019

Bankruptcy- Protection or Plague?

DO YOU PROJECT AND PLAN (in other words...stay stress-free?)

Forever 21 just became the latest victim of Chapter 11 bankruptcy protection. While Chapter 11 will provide them with time to reorganize their obligations and sell parts of their business (ostensibly to make them healthy again), we can still be certain that something went wrong...terribly wrong.

So what happened?

Historically, most retailers don't survive Chapter 11 in the long-term. Is it a plague? Or maybe it's just something to do with retail. What can be done to stop this from happening? Or better put...what steps should a company take to stop this from happening? In retrospect, many companies who file Chapter 11 determine later that they had to go the bankruptcy route because they were not able to keep up with the competition...whether it was online sales, trends, or other retailers...something was not planned for.

I enjoy playing chess, which is why I compare the demise of a company to that of the weaker chess player. The weaker, less experienced (or over-confident) player often fails to take into consideration possibilities (and probabilities) way ahead of its next move.

Whereas, the stronger company (no matter what the size) will do these things by carefully paying attention to projections and contingency planning. The ones that don't...need to start! Ongoing forecasting and planning must be integrated as part of any company's operations.

It is critical that the CFO, and management team, is armed with the right resources, financial reports and unbiased metrics to provide meaningful and practical information used in planning.

If a company does not have a full-time CFO, a Virtual CFO should be considered.



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Saturday, September 28, 2019

Hey Brokers...Why Knowing Your Client AND Financial Review Matters

Unfortunately, to many, the intended purpose of a “broker” has been “broken”. The majority of brokers are good brokers...and they don't deserve the negative reputation that has enveloped the industry, but the bad seeds are out there.  

So this is why lenders worry whether merchants are responsible borrowers.
A lender/broker relationship weighs heavily when measuring the successful outcome of a client's file. Why is that? The lender just wants to do business, provide financing...and then get paid back.

What Makes A Good Broker?

A good broker has resources and successful relationships in a specific niche to help his/her clients, and he will perform a “KYC”(Know Your Customer.)  

Networking alone isn’t going to cut it.  As a broker, you need to:

  1. Take your time to learn the process.
  2. Determine your clients' needs and wants
  3. Learn what the lender is looking for.  Next time you’re submitting a file, stop to make sure you send a file the lender wants.

1. Learn The Process

It is imperative that you learn your industry.  If you’re servicing a client who needs an advance, it is important that you review his/her ability to pay AND THEN you must stay connected with the client…including before funding, during, after and beyond.  Take ownership of your client.

If one advance exists, never put yourself in the position where your client gets a second advance (except in extremely limited circumstances).  Upon the first advance, you need to guide your client through becoming “bankable”, by making sure he manages his cash flow, and the importance for him to do projections.

2. Learn What The Client Needs And Wants.

This is the "KYC" portion of being a broker. Often a client presents themselves when they have less than two days before they have to have the funding they it is important to provide what the client wants, but don’t overlook his needs...which means conducting good financial review prior to the funding.

After you fund a client, take ownership.  Invest time in streamlining your relationships with them.  It is good practice to be comfortable with each client and check on them periodically.  Help the client plan their next steps, and beyond.

3. Know What The Lender Is Looking For.

What is a lender looking for?  What is their niche?  What types of files do they want?  NEVER send a lender files that don’t match their guidelines.

It is important that you send the lender completed files.  For example, make sure that you review the clients' bank statements and application prior to sending to the lender. Each bank statement should be complete, in numerical order, and right side up.  Limit the faxes.  Applications should be signed and dated.  AND LASTLY, before you send a file to the lender, you should have a completed intake form.

It is important you know (a) what the funds are going be used for, (b) a short history of the business, and (c) a comprehensive history of the owner(s).

Lenders will appreciate that you took the time to learn more about your client and will look forward to the next files that you send (as opposed to other brokers, who are not nearly as thorough.)

For more tips, feel free to reach out at or call 315-314-2426

Happy Funding!

Sunday, September 22, 2019

Were You Served a Summons After Defaulting On A Merchant Cash Advance or Loan? What's next?


One of the things I love about our company is speaking to so many business owners every day. Their businesses offer a wide array of valuable products and services.

But the inability to pay has been around since the birth of alternative lending. There is no wide array of what the actions can be; usually it comes down to four common choices that most business owners make following a default. Which one will you make? 

(Schedule a free consultation so that you won't be misled...and let our multi-dimensional company discuss your options with you.)

1. They Do Nothing

It is never a good idea to ignore a complaint.

If the complaint is not answered within the required time set by the court, the court may award a default judgment, which may then be sent to your state for domestication

THE COURT DIDN'T HEAR YOU because you chose to ignore it!  The judgment is often against your company, and you personally. 

2. Hire A Traditional Lawyer

You hire an attorney from a well-known what cost?

You acknowledge you took an advance or loan.

You know you did not pay on a timely basis. 

You hire a lawyer to defend you in court.  Now what?

Lawyers typically charge per hour. The final cost of having an attorney fight these lenders in court is unknown until the end.  Before long, you have been charged for countless hours reviewing documents, interviewing, filing answers, motions, cross-motions, interrogatories, exhibits, discovery, etc.

In the end, you will almost always have to pay what you owe the lenders anyway, then pay your attorney…AND then you may be ordered to pay the plaintiff’s legal costs also!


3. Hire a Debt Relief Company – NOOOOO…Don’t do it!

Debt Relief Companies are almost always not the answer!

Do not confuse DEBT RELIEF with debt restructuring.  The two are very different.  The typical model employed by debt relief companies is settling for pennies on the dollar, usually after some time has elapsed and the then the lender decides to cut their losses.  What good does that do for your business?  Your business may fall apart before the debt relief company is able to settle...and then who is ever going to finance you or your business again after you settle for a fraction of what you originally owed?

The cost of a debt relief company may be enough to bankrupt you!  We can’t count how many merchants reach out to us after a failed attempt with a debt relief company.  Even if you’ve engaged the services of a debt relief company, let us review it for you.  You’ll be surprised when you learn at how much the cost really is.

4. Hire Us!

Essential professionals under one roof!

At PFA, we take pride in helping our clients succeed.  A default is unsettling.  A summons and complaint can be scary. Your sleep, focus and attention are all compromised.  You are suspicious of trusting anyone who promises to help because you’ve been “burned” so many times.

Our team of legal and financial professionals will help you execute a plan that is agreeable with your lenders.  It’s possible that through refinancing, we help you eliminate debilitating payments and help you get back to running and growing your business.  Yes, we do refinance defaults.

What’s more…because we only have one reasonable flat fee, there is no uncertainty of how much you will end up spending. 
We can help. Be informed before you make a decision.  Schedule a free consultation with us. Hire a professional to review your business, make recommendations, and provide options and solutions to get your business back on track. Please contact us at, or call 315-314-2426.

Want to take an informal look at
how you would qualify for a loan?
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Wednesday, September 18, 2019

You Are Being Watched!

Yes, you are being watched!
Every decision you make has an impact.  Small business lenders (alternative and conventional lenders) will always review your past.  After all, history is usually a good indication of future results….at least that’s what we have learned.  The vast majority of us use technology and social media, which means we leave a blueprint of activity.  
Take this example:
John of ABC Company has worked hard all his life.  He has poured his entire life savings into his business.  John has not taken a vacation in 15 years and has been driving a 2001 Honda Accord since he purchased it new.  He has a new granddaughter who he hasn’t met living across the country in Bel Aire, CA and his wife has been pressuring for him to go visit. So what does John do? He applies for an advance, gets approved for $45,000 and decides to pay himself, take the much needed vacation to see his granddaughter, and buy a new car!  After all, this is the first time he’s able to pay himself more than the critical living expenses. Why not? He’s earned it…..Wrong!
He transfers $20,000 to his personal account, pays for the new car by putting down $10,000 and then pays off his personal credit cards using his business account.  He and his wife fly first class across the country, surprise their daughter and son-in-law by making a grand entrance in a Towne Car, pay for a spa to treat their daughter, and buy all sorts of “goodies” for their granddaughter.
All is documented:
  • The transfer from the business account to personal
  • The down payment for a new car
  • The payments to his credit cards using the business account
  • The selfie while relaxing in “first class” in Instagram
  • The video clip when they surprise their daughter and her family in Snapchat
  • The trip to the toy store to make purchases for their granddaughter…(all caught on camera)
  • And to top it off, the story in Facebook thanking XYZ lender for making this trip a reality

A few days later, John gets back home and decides to apply for a line of credit with a local hedge fund.  His business appears to be in good standing…healthy balance, no NSFs for a month, some new marketing, an upgraded sign to enter his store.  John gets a pre-approval and is now ready for due diligence.  John decides to take another advance ahead of his line of credit.  He pays a due diligence fee of $5,000.  He’s finally made it!  Wrong again!!!
After a review of his financials and background, John is grilled with questions like why he spends funds that are meant for running his business.  His answer? He looked at the aforementioned advance as the first time he had taken home a real paycheck.
REALITY:  His business management comes into serious question as he has been unable to pay himself for 15 years, had spent all the funds he just received a month earlier on non-business expenses, and had no break-through projects coming up.  John is ultimately denied a line of credit.
Two weeks later, he takes on another advance to help make the payments on his two previous advances.  He looks for more ways to get a loan, but it’s now virtually impossible since he is over-leveraged and riddled with too much short-term debt.
Sound familiar?  Don’t get caught in this cycle.  Hire a professional to review your business, make recommendations, and provide options and solutions to make you bankable. If you would like to reach out to us,
call 315-314-2234 or 315-314-2426 or get a free consultation HERE.

Want to take an informal look at
how you would qualify for a loan?