CASE STUDY IN FOOD RETAIL

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Our client is the owner of a chain of markets serving a predominantly Latino population. It has been in business since 1987. Gross sales for 2014 were $9.9 million. The company showed low assets and significant losses in their corporate tax return for 2012-14. In order to open a new location, they applied for a commercial real estate loan. Their application was declined by two major banks stating insufficient cash flow to cover the loan repayment.

GOALS

  1. Streamline supply chain and inventory management.
  2. Open a new location.

CAPITAL REQUIREMENTS

$725,000 for construction, leasehold improvements, inventory, and equipment.

ACTION PLAN

  • Restatement of the company’s financial documents for the previous three years.
  • Preparation and submission of amended tax returns for 2012 and 2013.
  • Updated Executive Summary with a detailed report on Use of Funds.
  • Updated Projections aligned with past growth trends.
  • Developed and implemented Debt Service Coverage (DSC) Ratio.
  • Monitor monthly Profit & Loss Statements in accordance with DSC Ratio.
  • After four months, submission of 2014 tax returns.

OUTCOME

An SBA-guaranteed 504 loan for $634,000 at 4.275% with an amortization period of 25 years.

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