Maximizing the Availability of Financing

CHALLENGE

A distributor of specialty products had grown rapidly over the last few years but now faced a potential ceiling on that growth without additional capital.  The business was very seasonal in nature, creating significant swings in cash and receivables.  The company had an SBA loan and a small line of credit, but this was not near sufficient to provide capital for growth.  The CEO was concerned about losing out on larger, profitable opportunities that the business potentially could not afford to pursue.

THE FINTREPID SOLUTION

Working Capital Analysis

Fintrepid Solutions conducted a detailed review of historical monthly A/R trends as well as a working capital forecast to reflect the impact on working capital of the continued growth of the business.  This analysis clearly demonstrated that the company was reinvesting significant profits to fund customer receivables, even greater than the CEO’s expectation, and thus severely limited growth potential.  This also demonstrated sufficient collateral to support a significantly larger line of credit.

Due Diligence and Financing

Leveraging its network of resources, Fintrepid Solutions identified potential banking partners to provide increased financing.  A financing package was prepared and assembled, highlighting the collateral strength that was identified, as well as demonstrating the ability to manage the line in light of the material seasonality.  Multiple term sheets were received, and Fintrepid Solutions was integral in negotiations to modify the final structure to provide the most flexibility for the company while still meeting the risk parameters for the bank.