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Summary Statement of

Ed Rankin

Chief Executive Officer
PeopleSolutions, Inc., Dallas, Texas

        If the BRIDGE Act had been in force when Ed Rankin's human management resource company began its rapid growth in 1996, things might have been different.

        "If we had been given an extra $250,000 at several points in our growth, that would have meant the difference between night and day," said Rankin, founder and CEO of PeopleSolutions®, Inc.

        "When you're a new business, you haven't earned the right to have people pay in advance. They pay once you've billed them for the work. I might have to pay my people two, three or even four times before receiving the first payment from the client. We were always behind in cash flow."

        The first cash crisis occurred as PeopleSolutions, Inc. entered its third year of operation, a period of unprecedented growth." Our clients, predominately large, U.S.-based multinational corporations, were asking us for more and more services.

         We were profitable. We were ranked among the 25 fastest growing companies in the Dallas-Ft. Worth area.

         "And we had no cash."

        Undercapitalized and delinquent on taxes, Rankin was forced to sell its receivables, at a discount, to an unregulated lender at high rates. "I had no choice. I sold my receivables, collected my cash, paid the IRS, and stayed in business."

         By 1997, things were looking up. "We had very strong gross profit margins and a backlog of receivables from a growing list of blue-chip, Global 1000 ® clients." A newly opened office in Austin became profitable in 90 days. The company was again ranked among the 25 fastest growing privately-held companies and among the 100 fastest-growing owner-managed businesses in the Dallas-Ft. Worth area. Revenues totaled $3.8 million.

        "A large regional bank extended us a credit line to finance our receivables and a working capital loan, which was used to pay off some equipment leases and release us from the factoring agreement."

        In 1999, Inc. magazine ranked PeopleSolutions among the 500 fastest-growing companies in the United States. But cash flow was once again a problem, and Rankin began to consider selling the business. The newly merged bank complicated matters by rejecting a request to increase the company's credit line, and then forcing PeopleSolutions into the bank's factoring division, saddling the firm with an onerous repayment schedule. "We had no cash to grow. It was all going back to the bank," Rankin said.

        PeopleSolutions was rescued later that year by a Small Business Investment Company lender. PeopleSolutions accepted a deal for $1 million in subordinated debt, which allowed it to grow from $4 million in 1999 to $6.5 million the following year.

        Rankin is convinced that the BRIDGE Act not only would have lessened his woes considerably -- it would also have accelerated PeopleSolutions' growth.

        "If we had been able to take advantage of the tax deferral provisions of the proposed Bridge Act, I believe that the company would be at least twice as large as we are today," Rankin said. "We would have added more people, who would be paying more employment taxes. And there's no question we would have created more jobs."


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A Tax Plan to Help Small Businesses Keep Growing


Revised: April 28, 2003 TAF

© Copyright 2003 Ed Rankin, All Rights Reserved