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Staffing Company IT

 

SITUATION 

Three Former IT executives created the company in 2009 to meet the growing demand for well-qualified, tech savvy temp workers. Profitable from the outset, the owners initially leveraged personal assets to support growth until their bank approved them for a $150,000 line of credit. When the company was awarded a multi-year contract with a national retailer, they approached their bank for an increase to their line of credit.  Unfortunately due to large shareholder distributions, the company had negative equity, and the bank was unable to help. The bank subsequently referred the company to Magnolia Financial as an alternative solution.

 

SOLUTION 

Magnolia met with the owners and was impressed with their experience as well as the growth opportunity for the company. Instead of focusing on the company's balance sheet, Magnolia saw potential in the new contract. In order to fund growth, Magnolia extended the company a $300,000 Accounts Receivable Line of Credit. The company is using the funds to cover increased payroll resulting from the new contract. The bank was able to keep the depository relationship by providing the business another option where they might otherwise have had to say "no". The company can now focus on winning new customers rather than worrying about how to finance the cost of growth.