Accounts Receivable Line of Credit

Tree Removal Company

Situation

Established in 2012, this Georgia corporation provides tree removal and stump grinding services for property management companies and other commercial customers located in Georgia, Florida and Tennessee.  Historically profitable and liquid, the company's line of credit with their bank was not utilized for some years and expired in 2021.  Subsequently, due to the economic downturn, the company's customers began to pay more slowly creating cash flow issues.  Additionally, labor shortages necessitated increased payroll expense to remain fully staffed.  Unfortunately, the same economic factors negatively impacted the company's operating results and the company reported a net loss on their tax returns.  As a result, the bank was unable to reestablish the previous working capital line of credit.  To provide the company with an alternative, the banker turned to Magnolia Financial for a solution.

Solution

Magnolia Financial quickly identified the value of senior management's operating experience and noted the historical positive operating results.  Within two business days of receipt of the requested financial information, Magnolia was able to extend a $300,000 Accounts Receivable Line of Credit.  Magnolia's working capital solution provided immediate relief of the cash flow issues the company had been experiencing and also provides additional availability to expand operations.  The referring bank continues to handle the non-credit relationship and will take back the working capital line of credit when appropriate.  

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