Had a call today from a small business man who had his $100,000 line of credit (against his house) canceled. The bank told him that the value of his home had dropped so much that if the line was used it would be more than the current value of his home. He has been using that line of credit to grow his business, never missed a payment, and for most the time it was not used. Using the credit line to carry accounts and buy inventory is a critical part of his business. Since he had no advance notice of the cancellation, his entire business may fail.
Having tried other banks to establish a new line of credit and having been turned down, he called asking for a solution. By analyzing his current assets, we determined that he could use personal savings plus the liquid assets of his business to continue operating. The problem was the need for working capital to grow.
Without working capital we could not really grow his business and obtain a nest egg from the profit. Our challenge now, is to start a home based business that can provide a source of future income to grow his existing business. The challenge I left them with was to spend a day with his wife and make a list of things that they could do in the evenings and on weekends that could produce an extra $3,000 per month. I asked them to think outside the box and make a list of things they would like to do together and which they thought could reach their goal.
No I don’t know what is going to happen; I will be seeing then the first of next week. We will brainstorm together and either select one of their ideas or one that we, together, come up with. When I left they were enthusiastic about their challenge and felt that they could self fund the growth of their business. In the future I will blog about the success of their new venture.
“Never give up”
Have a great day!