Has anyone worked with or heard of Duneland Financial for Deal Financing?
February 10, 2025
by a searcher from Buena Vista University in Douglas County, CO, USA
I was recently referred to Duneland Financial's lending products, which offer non-SBA acquisition options (LOC and Term Loans). Has anyone heard of them or used their financing? I have been able to find Duneland Capital in my searches but have been unable to locate Duneland Financial, so I am unsure if they are related.
Duneland Financial offers two primary non-SBA financing options for business acquisitions:
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Unsecured Conventional Lines of Credit
- LOC Amount: $500,000 – $1,000,000
- Terms: Prime interest rates with a 3-5 year interest-only draw period
- Purpose: Ideal for buyers who lack sufficient liquidity or want to preserve their capital while acquiring a business. These funds can be used as cash for purchases or as leverage for larger acquisitions.
- Advantage: Allows buyers to secure proof of funds (POF) in advance, making them more competitive by enabling faster closings compared to buyers needing full financing.
- Structure: A Special Purpose Vehicle (SPV) Corporation is set up with a AAA credit rating (setup fee: $50,000).
-
Non-SBA Acquisition Term Loans
- Loan Amount: $1M – $20M+
- Terms: 5-25 years, typically 80%-100% Loan-to-Value (LTV), rates around Prime
- Purpose: Suitable for buyers with a target acquisition in mind, including both U.S. and non-U.S. businesses (must be 3+ years old with stable financials).
- Advantage: Provides a structured loan solution to finance an acquisition, ensuring buyers can move quickly once they identify a business to purchase.
Both options can be used separately or combined to maximize purchasing power and speed up the acquisition process.
from Rensselaer Polytechnic Institute in Rocky Hill, CT, USA
It does rub the wrong way now that I have had (2) calls with Devin, and I originally pointed out to him (and Michael ) that they are asking for a lot for not having public LinkedIn profiles with a less than 1-year-old LLC. Slightly disturbing that that he has shared the SPV company name with you but not myself or my advisor, and I have emailed him 2x. This alone confirms we'll steer clear of the product and stay with our PE approaches; again, I am not trying to call him out negatively, but this is just not how to build trust or respect with potential clients.
from Rensselaer Polytechnic Institute in Rocky Hill, CT, USA
My advisor suggested otherwise; meaning, he would not share any information to Duneland until the party creating the SPV is a known entity, nor would he advise spending dollars on legal counsel until the Capital Group is revealed. This is where it stands now, given the radio silence from Devin since last meeting with me and my advisor on 2/18.
Furthermore, it was the exact risk of the SPV shell which is a “loophole” as conveyed by Devin, which my advisor had the most concern about. In his own words, he said, “How could the IRS not seek to place scrutiny on a 5 year old shell LLC with those loc funds ballooning overnight?”
Here are some thoughts gathered on it all based on the presentation that was shared with us. I’m observing many more cons than pros on 2nd time around on this:
1) IRS and Regulatory Red Flags: -Using a 5-year-old dormant LLC as a Special Purpose Vehicle (SPV) to suddenly receive large unsecured credit lines could trigger IRS scrutiny. -The IRS may question why a previously dormant entity is now reporting income, acquiring significant debt, and possibly funneling funds to an individual or another entity without clear operational activities. -If the LLC doesn’t have substantive business activity, it could be viewed as an abusive tax shelter or nominee entity, which are common red flags for audits.
2) Lender Misrepresentation Risks: -The “AAA credit rating” claim for the SPV is highly questionable—business credit doesn’t work that way unless the entity has a solid financial history with ongoing revenue. -If financial institutions are being led to believe the entity has genuine operational cash flow when it doesn’t, this could be seen as bank fraud or misrepresentation. 3) Potential for Personal Liability and Piercing the Corporate Veil: - If you (or any buyer) personally guarantee the lines of credit for an entity with no operating history, you may still be personally liable for the debt. -If the LLC is considered a “sham entity,” creditors could pursue piercing the corporate veil, making personal assets subject to collection. -Higher Interest Rates & Unsecured Debt Issues: -The pitch suggests using unsecured conventional lines of credit at “Prime” rates, but in reality, unsecured business LOCs for shell LLCs likely come at much higher rates. -Interest expenses could rapidly outpace the business’s actual cash flow, leading to potential default.
3) Potential for Personal Liability and Piercing the Corporate Veil:
-If you (or any buyer) personally guarantee the lines of credit for an entity with no operating history, you may still be personally liable for the debt. • If the LLC is considered a “sham entity,” creditors could pursue piercing the corporate veil, making personal assets subject to collection.
4) Higher Interest Rates & Unsecured Debt Issues:
-The pitch suggests using unsecured conventional lines of credit at “Prime” rates, but in reality, unsecured business LOCs for shell LLCs likely come at much higher rates. • Interest expenses could rapidly outpace the business’s actual cash flow, leading to potential default.
5) Compliance with SBA and Other Loan Programs:
-The Duneland presentation studies reference SBA loans, yet this method does not align with SBA financing rules. If an acquisition is later refinanced with SBA or conventional lenders, they will scrutinize the source of funds, and if they find non-transparent structuring, the loan could be denied or called due.
-If lenders discover that financing was structured through non-traditional means (e.g., a shell SPV with LOCs), it may lead to compliance violations or potential fraud allegations.
6) SEC and Consumer Protection Violations:
-If this is being marketed as an investment vehicle or lending program, it could fall under unlicensed financial advisory or lending violations in some states. • The “forward-looking statements” disclaimer in the deck does not fully protect the promoters or participants if regulators find misleading claims.