Story Credit - Example

Equipment: 500 GPS Units
Size: $175,000
Term: 60 Mos.
Structure: First + Last
Hurdles to transaction:

GPS transmitters, no collateral value, that will be located on rental equipment
Elderly owner whose sons run business with no documented succession plan
Sons will not guarantee
Recent structural changes in the businesses
Numerous affiliate entities
Multiple entities and intercompany transactions
Negative financial trends and losses on 2007 tax returns
Substantially increased leverage over the past two years
Price of oil experiencing rapid decline
Louisiana transaction

Reasons for approval:

Excellent personal credit (773/824)
Excellent payment history for the business
Limited personal debt
Long time in business and history of success
Personal guarantor has decent net worth and liquidity
Good interview

Summary:
21 year-old equipment rental company serving the Oil & Gas industry in Louisiana. The company is owned 100% by an elderly father who will PG, but his sons are running the day-to-day operations of the company and aren’t offering PG’s.
Alltogether the business shows six-figure losses on the tax returns but cash flows after adding back the depreciation, temporary consulting fees and the building rent they pay to the PG. The business is in the middle of a re-structuring and the interim financial statements are showing losses due to the $400,000 in consulting fees paid in 2008.

We structured this approval with guaranties from the owner plus all affiliate entities. We also obtained a junior lien on additional collateral.