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    6 Replies Latest reply on Apr 22, 2008 9:06 PM by FinanceHelp4U

    advice needed LOC or Loan for debt consolodation/expansion

    flaguy Newbie

      Hey All,

      First some history. We started our business in Jan 2005 - investing 160K of our own cash as well as using personal credit cards. In Feb '06 due to an oppourtunity to expand in our shopping center we doubled the size of the store... hence doubling many fixed expenses. In Jan '07 we purchased a local competitor who was in the process of closing his store after a sales deal they made fell through.


      Right now... we are in a cash crunch, although sales are up. We took on too much too fast. We are in the process of reducing the size of the store (Hence reducing many monthly fixed expenses more than 50%).

      In April '07 we got a SBA backed small loc for 50K, which is used up. We have 200K on cerdit cards (Both personal & business) and have payables of $75K due about the end of the month. At this point we have not ever missed any payments, or gotten too far behind.

      Due to using our personal credit cards our credit scores have dropped to 687 & 732. We have plans for the future to purchase or build our own building. Which would also make us a unique entity in our area able to offer additional services and expand income as well. I am not sure wether to approach lenders with the short term need, or more too also try and conslodate CC debt, or to expand into the long term plans and go for a long term loan/growth oppourtunity. (Or even if a lender would consider it)

      Annual sales are estimated at $600K for 2008 based on an already up 15% YTD over prior year. By reducing our rent, and if able to consolidate some CC debt our monthly expense reduction will be $14K.

      So after all that... what suggestions does anyone have on the direction to turn, or places to look for funding? Any assistance or advice is much appreciated!