Small Business Failure

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This paper is to research and analyze the failure of a small business. |

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TABLE of CONTENTS

Introduction

P&H Capital commercial mortgage..……………………………. 2

Reason for Failure

In My Opinion; Why Success became a Failure……………………….. 4

ANALYSIS

What could have been done better? ……………………………... 6

P&H Capital commercial mortgage
P & H Capital, a commercial mortgage company that was located in Brooklyn NY opened in 2009 that specialized in finding loans for small businesses. P&H Capital was founded by Ismail Humet, while working as a Wall Street analyst, and Shawn Porat, running a recovery judgment at the time and had funded their commercial mortgage company start-up with a mere $4,000. The two positioned with insight on the subprime crisis and the tightening of credit offers, believed they could match the small business lenders while offering alternative financing. Regardless of the current credit crisis associated with the housing bubble, P&H Capital were still able to close on their loans while specializing in several areas of financing such as, commercial real estate loans, SBA small business loans and equipment loans for both business owners and commercial investors in the $300,000 to $50,000,000 range. It was P&H Capital’s alternative financing that included SBA 7a loans, USDA B and I Loans, SBA 504 loans and Commercial bank Loans, which allowed P&H Capital to flourish in the mortgage industry. P&H achieved much of their clients due to the frustrations they encountered while working with commercial banks and their red tape bureaucracies, as well as concerned with their local banks not being able to offer the quoted terms or close on their real estate or business loan at all. P&H was able to curb these frustrations and concerns while providing longer fixed periods, amortization schedules, and more aggressive underwriting standards. On top of the attractive financing options and freedom from the bureaucracies consistently found among the industry, P&H also stipulated a clause that would hold P&H from making any profits from application fee’s, retainers, processing fees and more. Many of which their competitors enforced, also noted was P&H’s tag phrase “Paid on the success of our Clients”, which translated to P&H did not get paid by their clients until their loans have closed. P&H Capital’s competitors consisted of other lenders such as G&I Commercial Lending. G&I Commercial Lending a local yet nationally recognized financial company, forging most of the competition for P&H, also provides alternative sources for business capital. Its success backed with its relationships with lenders nationally has allowed for its business to continue thriving in the Brooklyn area. Extending beyond P&H’s business plan G&I also focuses on Accounts receivable, church financing, medical working capital, debt restructuring and business Acquisitioning. The business was doing well for about two years when P&H Capital received an application to piece together a $500 Million dollar deal that they believed was solid enough to make it. P&H’s commission on the deal was 1%, and one percent of five hundred million is worth a lot of money, enough so to carry the business for the rest of the year. Unfortunately the deal never got closed and P&H saw the end of the tunnel just before them. The reason behind the big deal falling through was that the lenders were not comfortable with the purpose of the money. The loan was to build factories in Asia, which would have had the lenders dealing with a foreign government, and dealing with a foreign government can become unstable with regulations, taxes and the further unknown a foreign government is subject to enforce. For a company to reel in a deal for that kind of money would prove to show that P&H did not take the business lightly. P&H certainly worked up enough of a reputation...
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