Background:
A large transportation company operating three subsidiaries in the northwest needed capital to help pay down a tax liability and keep their 120+ trucks running.
Financing Solution: ABL
Amount: $3,500,000
Location: Northwest
Industry: Transportation
Problem:
This 50-year old trucking company was experiencing revenue issues, mainly due to COVID-19, and needed to reduce costs and improve cash flow. They were factoring invoices with two companies because one lender felt uncomfortable about the credit of some their customers. The second lender was willing to lend on those customers at a much higher cost to the client. The client also had a number of open loans on existing trucks and had acquired an Economic Injury Disaster Loan (EIDL) through the U. S. Small Business Administration (SBA) early in the COVID-19 crisis.
Any additional funding transactions would be complex because the EIDL and equipment loans required subordinations, existing factoring contracts would need to be terminated and they had an outstanding tax liability to resolve.
Solution:
Within four weeks CFI was able to gather all information and documentation, conduct a thorough field collateral exam, obtain multiple subordinations and underwrite, document and fund this highly complex ABL transaction. CFI was able to help the client:
- Streamline their access to capital
- Decrease their financing cost, as compared to the previous factoring companies
- Move from two factoring lines to one asset based loan
- Reduce paperwork
- Reduce invoice verifications
- Provide the financing without sending a notice of assignment to their customers
- Provide faster funding on an ongoing basis
