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.