I like this financing option they have with American Express. Basically it's a line of credit against credit card receipts. It's a great, low cost source of monthly available cash that isn't tied to conversions. So the customer pays this off. Good news there.
This makes me less worried about cash in the bank when they have this line of credit to fall back on and is paid off by customers.
NOTE 9 – BUSINESS LOAN AND SECURITY AGREEMENT
In August 2015, the Company entered into a Business Loan and Security Agreement with American Express Bank, which allows the Company to borrow up to $174,000. The loan matures in August 2016 and will remain in effect for successive one year periods unless terminated by either party. The loan is secured by credit card collections from the Company’s store operations.
The agreement provides that the Company will receive an advance of up to $180,000 at the beginning of each fiscal month, and requires the Company to repay the loan from the credit card deposits it receives from its customers. Assuming the balance has been paid off by the end of the month, the Company will receive another advance up to the face amount of the note at the beginning of the next fiscal month.
The loan requires a loan fee of 0.5% of the outstanding balance as of each disbursement date. At April 2, 2017 and January 1, 2017, $4,741 and $136,629 was outstanding and is included in accrued expenses.
This makes me less worried about cash in the bank when they have this line of credit to fall back on and is paid off by customers.
NOTE 9 – BUSINESS LOAN AND SECURITY AGREEMENT
In August 2015, the Company entered into a Business Loan and Security Agreement with American Express Bank, which allows the Company to borrow up to $174,000. The loan matures in August 2016 and will remain in effect for successive one year periods unless terminated by either party. The loan is secured by credit card collections from the Company’s store operations.
The agreement provides that the Company will receive an advance of up to $180,000 at the beginning of each fiscal month, and requires the Company to repay the loan from the credit card deposits it receives from its customers. Assuming the balance has been paid off by the end of the month, the Company will receive another advance up to the face amount of the note at the beginning of the next fiscal month.
The loan requires a loan fee of 0.5% of the outstanding balance as of each disbursement date. At April 2, 2017 and January 1, 2017, $4,741 and $136,629 was outstanding and is included in accrued expenses.
