How a Food Manufacturer Pulled $2.43M Cash-Out to Pay Off Tax Arrears, MCAs, and Stabilize the Business
Sources: Small-Balance Commercial Refinance — PeerSense, Asset-Based Lending Hub
How did PeerSense solve this scenario?
Tax arrears cleared, MCAs retired, 6-mo working cap. A second-generation owner-operator of a 40,000-square-foot food manufacturing and packaging facility serving private-label and custom-product clients across the Mid-Atlantic. PeerSense placed the deal into industrial bridge cash-out with conservative leverage, asset-based underwriting, and fast execution. Composite case study based on the deals we close every month.
— PeerSense Composite Case Study · 2026-05-01
At a glance
| Loan size | $2.43M cash-out refinance |
| Property type | 40,000 SF food manufacturing / packaging facility |
| Operations | Ambient fill, private label, custom product |
| LTV | 60% |
| Term | 24-month bridge |
| Use of proceeds | Existing note payoff, tax arrears, MCA consolidation, 6-month interest reserve, working capital |
| Exit | SBA 7(a) or conventional permanent refinance |
The borrower
A second-generation owner-operator of a 40,000-square-foot food manufacturing and packaging facility serving private-label and custom-product clients across the Mid-Atlantic. The business had real revenue and real customers, but the operator had hit a difficult two-year stretch:
- A major client had reduced volume mid-contract
- He'd taken on two merchant cash advances to bridge the gap
- He'd fallen 18 months behind on property taxes
- His existing commercial mortgage was approaching maturity
- His relationship bank told him they couldn't refinance until the tax arrears were cleared and his financials had three clean quarters
He was running a profitable operation that looked, on paper, like a borrower in distress.
Why traditional financing said no
His bank's calculus was simple: tax arrears + MCA stack + maturing note = no loan today. They weren't wrong about the inputs. They just had no product that would solve the problem. SBA 7(a) financing could've worked eventually — but only after he'd cleaned up the tax arrears and demonstrated three clean quarters, which required capital he didn't have.
This is the classic small-business catch-22: he needed capital to clean up the financial picture that would qualify him for clean-money capital.
How PeerSense solved it
We placed the deal into a 24-month interest-only commercial bridge at 60% LTV against the appraised value of his free-and-clear-on-equity facility. The structure was deliberately built to solve every problem in one transaction:
- $2.43M cash-out at 60% LTV
- 24-month interest-only term — long enough to season clean financials and exit to SBA
- 6-month interest reserve funded at close — protects him from cash flow stress during the recovery period
- Use of proceeds:
- - ~$1.18M — payoff of existing maturing commercial note
- - ~$430K — delinquent property tax payoff (cures the tax lien)
- - ~$310K — MCA consolidation (retires both advances at close)
- - ~$180K — 6-month interest reserve
- - ~$330K — operating working capital
What made this deal close where his bank couldn't: - Asset-based underwriting — the lender looked at the building's appraised value first - Use of proceeds was the story — the lender saw clearly that this loan was the cure, not new debt piled on existing debt - Interest reserve funded — eliminated the lender's cash flow concern during the recovery period - Clear exit path — SBA 7(a) refinance at month 18-24 with clean tax records and 12+ months of clean operating history
The outcome
- Tax lien cured at close — back in good standing with the county
- MCAs eliminated — restored ~$28K/month in cash flow
- Existing note paid off — replaced with a single bridge structure
- Major client volume restored by month 8 (separate business development effort, but enabled by financial stability)
- Three clean operating quarters documented by month 18
- Exit: SBA 7(a) refinance package submitted in month 20 — pending approval
Frequently asked questions
Can I refinance my commercial property if I have property tax arrears?+
Most banks won't refinance until the tax arrears are cleared. Asset-based bridge programs **will** refinance with tax arrears in the picture if the cash-out proceeds will be used to cure the tax lien at closing. Curing the tax lien is often the entire point of the loan.
Can a food manufacturing facility get an asset-based commercial loan?+
Yes. Owner-occupied light industrial, food processing, and manufacturing facilities are core property types for asset-based commercial bridge programs. The real estate is the collateral; the operating business doesn't need to look pristine.
Can I use proceeds to pay off merchant cash advances?+
Yes. MCA consolidation is one of the most common use-of-proceeds in this product. Most lenders will require evidence (payoff letters) that the MCAs are being retired at close.
What's an interest reserve and why does it matter?+
An interest reserve is a portion of loan proceeds set aside at closing to cover interest payments during the early months of the loan. For a borrower coming out of a difficult period, this protects against cash flow stress while the business recovers.
Can I exit to an SBA loan after the bridge?+
Yes — this is the most common exit path for owner-occupied commercial bridge loans. SBA 7(a) requires clean tax records, 12+ months of clean operating history, and reasonable cash flow. The bridge gives you the runway to develop all three.
How long does this kind of complex bridge take to close?+
Typically 30-45 days, given the complexity of the use of proceeds and the multiple payoffs at closing. Tax lien payoffs and MCA payoffs both require coordination with multiple counterparties.
What LTV can I expect on a complex commercial bridge?+
Typically 55-65% LTV. The lender wants conservative leverage to absorb the operational uncertainty during the workout period. ---
Have a similar scenario?
Composite case studies based on the deals we close every month. PeerSense routes to the right program + lender.
Composite case study. Names, locations, identifying details, and dollar amounts modified to protect borrower privacy. Actual rates and terms vary by borrower, property, and market conditions. PeerSense is a capital advisory firm and does not directly originate loans.