Can pre-existing customer receivables be refinanced as an installment loan?
Yes, because the installment loan is recourse and is guaranteed by the Member, aged debt owed to the Member can be written into an installment loan. The advantage to the Member is that the debt is professionalized with a note, security agreement, and personal guaranty. FMSI takes over collection efforts and provides the wholesaler with cash flow for aged receivables. In the event of customer default, the Member must repurchase the debt; however, all loan documents are assigned to the Member, putting them in a stronger legal position.
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