Page 49 - GS150702
P. 49
Education
Sale versus loan comparison 24-month cash flow:
Terms will range, but for this example, I'll use a 12 percent
interest rate, interest only payments for 12 months and Loan/sale proceeds (net) $360,000 $348,000
a five-year repayment term. The following example 24-month net residual cash flow $393,600 $0
compares a sale versus a loan scenario.
Total: $753,600 $348,000
Assumptions:
(*Assumes no hold-back)
Residual portfolio: $20,000 per month With the loan scenario, you retain full ownership of the
Sale multiple: 30x portfolio while getting the capital needed to expand and
grow without triggering a nasty tax problem. So, before
Effective tax rate: 42% (state and federal) you sell, it's worth considering all and other options.
Loan Multiple: 18x
Interest Rate: 12% per annum Jeffrey I Shavitz is the Managing Director of Affinity Solutions Inc.
(interest only is charged for and its Navigator product. His experience in payments including co-
24 months) founding Charge Card Systems Inc. that was sold to Card Connect in
2012, Alternative Merchant Processing, dedicated to high risk merchant
processing and Charge Card Funding involved in the cash advance
Secured loan Sale of residual space. Jeff's first book, Size Doesn't Matter - Why Small Business
is Big Business; Profit NOW from the Small Business Boom!, will
Proceeds received: $360,000 $600,000*
be released in August 2015. He can be contacted at 800-878-4100
Taxes due: $0 $252,000 or jshavitz@affinitysolutions.com; for additional information on his
Net proceeds available: $1,800,000 $348,000 activities, please visit www.jeffshavitz.com.
Monthly interest payment: $3,600 N/A
Net monthly residual to ISO: $16,400 $0
Sale versus loan comparison 24-month cash flow:
Terms will range, but for this example, I'll use a 12 percent
interest rate, interest only payments for 12 months and Loan/sale proceeds (net) $360,000 $348,000
a five-year repayment term. The following example 24-month net residual cash flow $393,600 $0
compares a sale versus a loan scenario.
Total: $753,600 $348,000
Assumptions:
(*Assumes no hold-back)
Residual portfolio: $20,000 per month With the loan scenario, you retain full ownership of the
Sale multiple: 30x portfolio while getting the capital needed to expand and
grow without triggering a nasty tax problem. So, before
Effective tax rate: 42% (state and federal) you sell, it's worth considering all and other options.
Loan Multiple: 18x
Interest Rate: 12% per annum Jeffrey I Shavitz is the Managing Director of Affinity Solutions Inc.
(interest only is charged for and its Navigator product. His experience in payments including co-
24 months) founding Charge Card Systems Inc. that was sold to Card Connect in
2012, Alternative Merchant Processing, dedicated to high risk merchant
processing and Charge Card Funding involved in the cash advance
Secured loan Sale of residual space. Jeff's first book, Size Doesn't Matter - Why Small Business
is Big Business; Profit NOW from the Small Business Boom!, will
Proceeds received: $360,000 $600,000*
be released in August 2015. He can be contacted at 800-878-4100
Taxes due: $0 $252,000 or jshavitz@affinitysolutions.com; for additional information on his
Net proceeds available: $1,800,000 $348,000 activities, please visit www.jeffshavitz.com.
Monthly interest payment: $3,600 N/A
Net monthly residual to ISO: $16,400 $0
