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Motel Owner Buys a Gas Station with an Unsecured Line of Credit and an SBA Term Loan


An entrepreneur operates a wireless pre-paid card distribution business in New York and New Jersey. The telecom carriers demand money for minutes upfront and offer discounts with bulk purchases. Therefore, the distributor generally needs a credit of 14 to 21 days to sell the cards. The entrepreneur funded the supply purchases and other expansion needs through a home equity line and private loans. Also, the small business owner's accountant advised taking write-offs on the business to offset the high cost loans. This lowered the debt servicing ratio (DSR).

The Need

The business owner needed an unsecured line of credit for $400,000 to take advantage of the bulk discounts on minutes from carriers and launch a private label card for the Hispanic market.

Financing Solution

Biz2Credit suggested the entrepreneur to show higher earnings before interest, depreciation, taxation and amortization (EBIDTA) in the current financial year. This set the stage for lower cost of funds in the future by improving the business's DSR. In the interim period, Biz2Credit analyzed the business, personal tax returns and personal financial statements. Using accounts receivables as assets, Biz2Credit procured an unsecured line of credit for the entrepreneur from two different lending institutions.


  • Accessed $400,000 at prime rate as a combination of line of credit against the business and A/R which are treated like assets thus lowering the interest rate by 200 basis points on average.
  • Owner took advantage of a 3 percent bulk discount from telecom carriers
  • Launched private label product and sells an extra $300,000 of cards in three month


  • Lower cost of the funds by around 300 basis
  • Profitability improvement and cheaper money
  • D&B business credit score boost by 195
  • Increased margins by 5 percent to 6 percent
  • Created channel for more financing in the future as Account Receivables increase

The Biz2Credit case manager suggested taking a business acquisition loan which would fund 80 percent of the acquisition price and also provide another $50,000 (through the SBA loan program) for working capital against the gas station.