Thanks to Opportunity Fund for this story!
“I’m not sure if you and your team understand the difference your organization is making in the survival and longevity of small businesses like ours. It means so much to have real people who care and who are concerned about your success on your side. It means the world and it’s definitely a relief knowing we are finally out of the shark infested waters of cash advances and knowing we have been given a chance to succeed. So again, THANK YOU.” –Southern Girl Desserts
Catarah Hampshire began baking southern-style cupcakes as a hobby, until she realized how much people loved the comforting, delicious taste of southern hospitality. Who isn’t curious about trying a Hennessey and Coke cupcake? Or having a chicken and waffles treat for dessert? Indulging in a tiny pecan pie-cake?
Catarah began serving these creative treats to the public in 2007, when she officially opened the doors of her gourmet cupcake boutique, Southern Girl Desserts in Los Angeles. Shortly thereafter, she was joined by co-owner Shoneji Robison. Business took off quickly and it wasn’t before long until the “Dessert Divas” needed financing to purchase extra equipment so that they could keep up with demand and start selling their popular cupcakes nationwide. Catarah and Shoneji needed cash fast for their rapid expansion and turned to a merchant cash advance company (MCA), Wide Merchant Investment, for help. Even though the MCA would not give them the full amount they needed, Catarah and Shoneji accepted the high terms and got extra financing from alternative lender OnDeck Capital. Without realizing it, Southern Girl Desserts had fallen victim to predatory lending and quickly found themselves caught in a vicious cycle of debt.
Catarah and Shoneji were unable to keep up with the high payments and within three months from signing with OnDeck, they were forced to take on two additional cash advances from Yellowstone Capital and Pearl Cash. With more than 40% of sales being pulled by these four predatory lenders, costly overdraft fees began racking up quickly, further suffocating the business’ cash flow.
It wasn’t until Catarah received a flyer about Opportunity Fund’s EasyPay merchant cash advance refinance program that she was able to find someone to help. An Opportunity Fund business advisor explained to them that they had deserved something much better than what they were receiving. Opportunity Fund refinanced Catarah and Shoneji’s merchant cash advance debt with a $40,000 EasyPay loan, cutting their monthly payments by ninety percent, thanks to a longer term and a lower interest rate. Loan repayment is tied to sales at their business. They pay more when business booms and less (or none) on slow days. They repay the loan with a fixed percent of all debit and credit card sales to automatically repay the loan, a far lower amount than what their merchant advances were taking. This loan also helps them to build their credit, since it is a real, regulated business loan.
With cupcakes flying out the door and financing that fits their business, Catarah and Shoneji can return their attention to planning for the future, instead of worrying about tomorrow.