Background:
This manufacturing company specializes in providing accessible personal defense solutions to meet the needs of various customers. With nearly two decades of experience in the industry, the company distributes to wholesalers that sell to a wide network of individuals seeking self-defense options.
The business had previously financed equipment through Commercial Credit Group (CCG), our affiliated equipment financing company. For four years, this partnership enabled the company to acquire the necessary equipment to enhance their production capabilities.
Financing Solution: Factoring
Initial Amount: $1,500,000
Location: South
Industry: Manufacturing
Problem:
When the company decided to transition its equipment financing and working capital solutions to a bank, they anticipated a smooth process. However, upon making this switch, they found themselves unexpectedly confronted with a multitude of bank covenants. These covenants placed restrictions on the company's financial activities including, limits on borrowing, requirements for maintaining certain financial ratios, and restrictions regarding the use of funds. These unanticipated conditions eliminated the company’s flexibility and made them reconsider their decision to move away from CCG.
Solution:
The business owner reached out to his original CCG sales representative and explained the situation. Commercial Credit Group stepped in to refinance some of their equipment providing a working capital boost. They then realized the need for an ongoing line of credit to assist in growth. CCG suggested that CFI’s invoice factoring would be a great solution.
Due to their strong revenue and accounts receivable, they were able to quickly qualify for an initial factoring line of $1.5 million. Invoice factoring provided them with ongoing working capital that can grow as the company grows and eliminated the need to rely on a bank for a line of credit. This approach provided immediate relief and offered a simplified and efficient solution for managing the company's cash flow without the restrictions required by bank agreements.
