Wrong Capital at the Wrong Time

“If you spend too much time thinking about a thing, you’ll never get it done.” - Bruce Lee

Jane took those words from the legendary Bruce Lee and decided it was finally time to relocate her growing martial arts studio to a larger space. Business was good and after 11 years in the same location, Jane had her expansion all planned out. After gaining approval for a SBA loan and choosing the new location, she was well on her way. Or so she thought...

While she anxiously awaited the closing of her loan (SBA loans sometimes take months to close due to their complexity), Jane decided she needed working capital financing in the interim and she secured a short term loan from an online lender. Jane did not worry about the high interest rate or the fine print as she only needed the funds for the next 30-45 days.

Unfortunately the fine print unraveled everything. This particular online lender reported to personal credit bureaus. The new loan dropped Jane’s credit score below the SBA minimum. Jane now found herself in a mess of a situation: having dropped below the minimum requirements, her SBA loan approval was rescinded.

Jane was now stuck with a high-interest loan with no way to pay it off, and an expansion project with no financial backing.

Thankfully, Jane’s SBA lender recommended she contact One Degree Capital for help.

One Degree Capital paid off Jane’s short term loan by refinancing it into a business loan that did not reflect on her personal credit with MUCH better terms. Jane’s credit score soon recovered and she was able to re-qualify for the SBA loan. The planned expansion of her martial arts studio was back on track.

What can we take away from Jane’s story?

One of the challenges when working with any lender is that they can have “tunnel vision” and only concern themselves with the type of loan they provide rather than look at the “big picture” of what a business truly needs. In this case, Jane’s SBA lender didn’t consider her short-term needs, and her short-term lender didn’t appear to be concerned with Jane at all (but that’s a story for another time).

Even though we came in late to the story, our Business Capital Advisor was able to help evaluate the “big picture” for Jane and figure out exactly what type of financing was going to help her accomplish her goals - in this case, the goal was to re-qualify for SBA and get her expansion completed.

In the end it all worked out for Jane and her growing martial arts studio now has room for more karate chopping and high kicking students.

“Life itself is your teacher, and you are in a state of constant learning.” - Bruce Lee

We couldn’t agree more, Bruce.