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    7 Replies Latest reply on Dec 27, 2007 2:20 PM by DomainDiva

    Consolidation Suggestions

    flyboy Newbie
      I am the Executive Director of a substance abuse treatment center for women, pregnant women and women with children. When we started up three years ago, the property was purchased from an out-of state owner. To get to the point, we had a personal loan provided for the purchase and repair of the facility we are currnetly in for 165k. Shortly after taking possession, we found out there was an outstanding tax debt in the amount of 117k. I have sought legal advice, and quite honestly, dealing with this situation with an out-of-state entity could take years as well as unbelievable legal fees.......needless to say the debt was paid through a loan in the same amount.

      We have been open and licensed for three years now and our finanicals show improvement each year. The personal loan was froma current employee. The tax loan was thorugh a VERY small local bank that provided only short-term and high rates.

      I want the organization to stand on it's own merit but I can't find options that don't require me to provide all of my personal financial information and my signature as a quarantor. We are a 501(c)3 entity.

      Consolidation provides a fixed budget item which is also of great benefit as a non-profit. Property and content assessments are approximately 390k.

      I am interested in any options that will provide a longer term loan arrangement with fixed and reasonable rates.
        • Re: Consolidation Suggestions
          LUCKIEST Guide
          flyboy, Welcome and thanks for sharing. Do you want to tell where you are located (just the State)
          Guessing that you have Accountants?? and Lawyers??
          You mention dealing with out of state entity and debt was paid through a loan??
          If you are a 501(c)3 entity, why do they need your signature as a guarantor??
          Is there a Board of Directors??
          LUCKIEST
          • Re: Consolidation Suggestions
            LUCKIEST Guide
            I know I just answered BUT, please explain "
            Consolidation provides a fixed budget item which is also of great
            benefit as a non-profit" ??
            Thanks again
              • Re: Consolidation Suggestions
                flyboy Newbie
                Probably somewhat of a simplistic comment on my part....only meant that for annual budgeting purposes, it would nice to know exactly what the loan payments are going to be for the duration of a longer term loan as compared to wondering what is going to happen to my rates at the end of 5 years with a balloon.
              • Re: Consolidation Suggestions
                DomainDiva Ranger
                I do not understand how you could have closed on a property without discovering that there was a tax lien. Who did the title search and why was this not uncovered PRIOR to closing? It seems to me that there is some fraud or negligence here.... who did the due diligence on this property prior to purchase?

                You will have to provide all of your personal information as well as tax returns to anyone considering your business for a loan. You must personally guarantee the loan as well. Banks don't loan money like they used to..it has changed dramatically. Basically the banks want you as a business customer to put your money (guarantee) where your mouth (request for a loan) is. I have several business cards, LOCs' as well and ALL were given to me wtih the caveat that I personally was responsible for all of this in the very end....businesses or no businesses.

                But I am still more interested in the tax lien that you discovered after closing.
                  • Re: Consolidation Suggestions
                    flyboy Newbie

                    The tax lien issue is very complicated and has a great many parties involved, which include county supervisor, county assessors, attorneys, owners and so one. Yes....there were many mistakes made in the process and there should be accountablity....but the bottom line is we do not have the resources to support a lengthy legal battle. Part of the problem is also related to having made application for non-profit status and it taking 18 months to be completed. Prior to the notice of the non-profit status, it is suggested that we continued to be responsible for accumulated tax.

                     


                    As for your comments about personal guarantee. What happens if I leave the position I am in and go elsewhere.......what happens to my personal guarenteee then?
                      • Re: Consolidation Suggestions
                        DomainDiva Ranger
                        Did you get title insurance with the property? I ask because the title was not clear when you closed and the title company could be liable. As far as a legal fight, you can go to the Attorney Generals office and let them fight for you.

                        If you are considering a move already then it does not seem prudent to acquire more debt.