Machine Tool Fabricator

Situation

After a long career in the machining industry, the owner started his own company in 2007.  With 2 CNC machines and 1 lathe machine, the company manufactures machining parts for local businesses.  With an excellent reputation in the industry, the company was awarded a large contract as a preferred supplier for an International Machine Tool Company.  Although the new business would double the company’s revenues, they did not have enough working capital to fund the raw materials increase resulting from the contract.  With limited collateral to pledge and the owner's challenged personal credit, the company was unable to secure a traditional bank line of credit. 

Solution

Introduced by a current client, Magnolia met with the owner to understand his growth plans.  Despite the significant initial costs and 45 day terms demanded by their customer, the contract was expected to become very profitable for the company.  As a result, Magnolia extended the company an initial $50,000 Working Capital Line of Credit with the ability to increase the credit facility as needed.  Magnolia provides financing when orders are shipped so the company does not have wait 45-plus days to be paid.  The company uses the funds provided by Magnolia Financial to order steel and other raw materials so that they can quickly and efficiently produce parts without delay.  Without the Accounts Receivable Line of Credit provided by Magnolia, the company would be unable to execute on the contract that will double business in 2012.

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