School Transportation Provider Consolidates Equipment Loans, Makes Balloon Payment and Pays Off Tax Liens

Faced with a >$4 million tax lien and a near-due balloon payment, school bus operator needed cash to make things right with Uncle Sam and payoff existing lenders.

Situation

Growing tax burden and recent capital expenditures put a substantial drain on cash flow

As the company and fleet grew, they needed to address a tax liability to assure continued growth. At the end of 2017, their tax liability totaled more than $4 million. Additionally, they owed a couple of equipment lenders over $400,000, one of which had an impending balloon payment. These obligations jeopardized everything they had worked so hard to build.

Download the case study to learn more about how this school bus operator  consolidated debt and was able to make a balloon payment and pay off a tax lien.

However, the company had several positive things going for them. First, it had an abundance of equity in its existing fleet to use as loan collateral. Second, the company has several large, long-term contracts to demonstrate a guaranteed revenue stream. The new equipment loan would not be new debt, but would allow them to pay off the IRS, eliminate several existing lenders, streamline monthly payments and improve cash flow.

They needed a lender that would:

  • Understand their IRS situation and be willing to work them through a challenging closing timeline
  • Offer flexibility in structuring transactions
  • Respond quickly and make rapid decisions at all levels of the organization
  • Be familiar enough with their industry to understand their seasonal business and equipment needs

Solution

Equipment loan consolidation and refinancing pays off tax lien, reduces monthly payments and allow for seasonal skip payments

CCG structured a loan that accomplished the following:

  • Paid off the total amount of the tax lien, freeing them from a growth impediment
  • Reduced the total number of secured lenders by consolidating debt, easing the burden on the accounts payable department
  • Reduced their monthly debt service, freeing up cash flow
  • Provided ongoing seasonal skip payments during their slow season, to help ease cash flow pressure when revenue dips

School Bus Financing and Debt Consolidation Case study download