Butler Lumber

Statement of firms position Butler Lumber follow is looking for more(prenominal) cash due to a fast lumber market and a slightage of funding. Their regular bank, suburban National Bank, is not willing to expand their exiting loan to an tot greater than $250,000 without securing the loan with real property. An other(a) loan is cosmos offered by a second bank, Northrup National Bank, for $465,000, with the understanding that the prior loan would be rolled into the second. The interest on the sweet loan would be prime + 2%. The co-founder, Mark Butler, owes a major note to the other original partner, who Mark bought out. He has a mortgage on his 12-year-old house and no other significant investments. Marks personal references indicate that he is hard-working and watches his business very closely. Marks current prominent debts are as follows: Bank note for $247,000 Outstanding debt from dispense partners $157,000 Accounts payable $343,000 Accrued expenses $51,000 Current portion of long-term debt $7,000 long-term debt $43,000 Total liabilities $848,000 Net income is projected at $56,000 based on projected sales of $3.6m. Butlers business relies more heavily on the repair industry than on forward-looking construction, so it is somewhat protected against market fluctuations on crude construction.

Major recommendations Northrup National Bank should extend the loan to Butler. The confederacy will roll much of its existing debt into the new loan, without extending itself significantly further than it currently is, and at a more cordial rate. Butler has been successful in keeping current on its debts, and based on projections should have the means to start remunerative these debts down. From the banks perspective, theres little jeopardy involved. With the industry expected to grow so much in the next year, Butler will be in a strong position, and potentially interested in borrowing more at the end of 1991. Butler Lumber Co. should take the short term loan and... If you want to get a ripe essay, order it on our website: Orderessay

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