AmiSight 10/9: Would You Risk Your Home to Save Your Business?

Every so often, a conversation with a business owner lingers with me long after it’s over. I recently had one of those experiences with an owner who has had a particularly tough couple of years. Like many, he has weathered the pandemic, rising costs, and shifting markets — all the recent entrepreneurial storms — and he’s got the scars to prove it. To stay afloat, he borrowed heavily, taking out approximately $550,000 from online lenders and another $500,000 in an Economic Injury Disaster Loan. This represents a significant amount of debt for a service business with approximately $4 million in top-line revenue.

The monthly payments on that short-term debt now run about $35,000 — a crushing burden that’s squeezing cash flow and leaving little room for anything else. Perhaps surprisingly, his situation improved somewhat when he recently refinanced shorter-term, smaller loans into one larger loan with slightly better terms. But the cash flow impact still hurts. To top it off, he has a monthly payment of approximately $2,300 on his EIDL loan.

But there’s a potential way out. Head over to my 21 Hats Column to continue reading.

Contact Us Today!