1. Alternative Funding
Group
Case Study
APARTMENT
UPDATERS, INC.
“Names and numbers have been
changed to protect the innocent.”

2. When
Finance Solutions
Require
Fresh Perspective

3. The Situation
 Inbusiness more than 20
years
• Loyal customer base
• Recognized market
leader

4. The Situation
 In business more than 20 years
• Loyal customer base
• Recognized market leader
 Sell and Install updated
floor coverings, etc. for
temporarily vacant
apartments

5. The Situation
 In business more than 20 years
• Loyal customer base
• Recognized market leader
 Sell and Install updated floor coverings, etc. for
temporarily vacant apartments
 Industry negatively
impacted by recession ...
and “redlined” by many
banks

6. The Situation
 Sell and Install updated floor
coverings, etc. for temporarily vacant
apartments
 Industry negatively impacted by recession
... and “redlined” by many banks
 Owners divorce …
surviving Owner/
President probably
not favored by Bank

7. The Situation
 Industry negatively impacted by recession ... and
“redlined” by many banks
 Owners divorce … surviving Owner / President
probably not favored by Bank
 Collection problem with
major customer … $500K
delinquent account
(95% later recovered)

8. The Situation
 Owners divorce … surviving Owner/President
probably not favored by Bank
 Collection problem with major customer … $500K
delinquent account (95% later recovered)
 Bank downgrades credit …
moves to SAG … freezes
line of credit … $15K /
month amortization

9. The Problem
 Frozen bank line causes
Cash Flow problems and
tight Liquidity

10. The Problem
 Frozen bank line causes Cash Flow problems and
tight Liquidity
 New competition from
construction contractors
… erodes profit margins
& market share

11. The Problem
 Frozen bank line causes Cash Flow problems and
tight Liquidity
 New competition from construction contractors …
erodes profit margins & market share
 Need Cash injection and
Line Of Credit to retain &
expand market share in
recovering economy

12. The Problem
 Frozen bank line causes Cash Flow problems and
tight Liquidity
 New competition from construction contractors …
erodes profit margins & market share
 Need Cash injection and Line Of Credit to retain &
expand market share in recovering economy
 Company and its bank
retain SAG mentality

13. The Solution
 Refinance owner’s house
• Patient & low cost
money
• Remove from potential
collateral pool
• Paid In Capital

14. The Solution
 Refinance commercial real
estate in LLC
• Off balance sheet equity
• Paid In Capital
• Pay corporate bank debt
• Eliminate $15K payment

15. The Solution
 Establish $500K bank line
• No beginning balance
• No borrowing base
• No maturity date

16. The Evaluation
 Impact on Cash Flow
• Eliminate $15K / month
debt without increase
in Rent

17. The Evaluation
 Impact on Equity
• Paid In Capital from
House
• Paid In Capital from
Commercial Building

18. The Evaluation
 Impact on Liquidity
• Pay off existing
corporate debt
• Establish fresh bank
line of credit

19. The Evaluation
 Impact on Market Position &
Opportunity
• Capacity for more work
• Bulk purchases & shipping
• Inventory stocking levels –
valued by customers
• Viable banking relationship

20. The Evaluation
 Impacton Business
Psyche
• Senior Management
re-focused on
productive activity