Building Products Supplier

Situation

In business since 1977, this company designs and manufactures trusses for a variety of commercial and industrial projects. Despite a solid reputation in the industry, the company had fallen on tough times due to the downturn of the economy. With consecutive years of losses, the company’s Line of Credit was cancelled by their bank and their loan was placed into Special Assets.  Conventional bank financing with another lender was not an option due to the historical losses leaving the company with no credit facility in place to finance its business.

Solution

With a detailed turnaround plan in place, Magnolia Financial extended the company a $750,000 Asset Based Line of Credit (“ABL”) secured by Accounts Receivable and Inventory.  As part of the agreement, Magnolia used a portion of the initial funding to reduce the bank’s exposure and helped the company exit Special Assets.  The funding provided by Magnolia not only facilitated the bank exit but also gave the company the financing needed for growth.  With a major competitor now out of business and sufficient working capital in place, the company is on pace for a 30% revenue increase from the previous year and a return to profitability.

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