Business Law Case:

Lori has a small nail and make-up business, but she is very creative and has a large inventory of cool new products in which she tries to interest her clients. Unfortunately, it is a very competitive industry and it is difficult to determine what would interest her clients. Lori has not always guessed correctly, and her business, which is unincorporated, has struggled; she already has 2 mortgages on her home to support it. Some of her suppliers allow her to carry their products on consignment but many do not and she has maxed out her line of credit with the bank.

Lori has now come across a new line of hair product which she thinks is very promising for the bridal market, which is the cash cow of her business.

This hair product uses a special blow-set machine which she could buy or rent from the supplier. Lori intends to carry this product for at least 4 years and has calculated that the cost of buying the machine at the low financing rate offered by the manufacturer to preferred customers is the same as renting it for 23 months. Thus she would like to buy the machine, but the manufacturer is rightfully concerned about her debt situation.

Imagine you work for a small finance company. Lori has approached you to see how she can rearrange her affairs. What might you suggest?