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Start-up Trucking Company

 

SITUATION:

 

This trucking company initially operated as a division of a larger wholesale distribution company.  Recognizing the opportunity to expand, the owner created a separate entity that could provide a variety of hauling to other companies throughout the southeast.  With only two trucks, the owner approached their bank for a working capital line of credit to grow the company.  However given the company had only operated as a standalone entity for less than 2 months, he did not qualify for a traditional bank line of credit.  Instead of simply telling her customer “no”, the banker introduced Magnolia Financial as an alternative financing solution.

 

SOLUTION:

 

Despite the limited operating history, Magnolia Financial recognized the opportunity for growth and immediately provided the company with a proposal for a $75,000 Accounts Receivable Line of Credit with a 90% advance rate.  Instead of waiting 30 days or more for customers to pay, the owner can immediately borrow against their invoices to hire new drivers and make sure all new truck lease payments are made on time.  The owner can now focus on finding new customers and growing the business as opposed to worrying about payroll and cash flow.  The banker was able to keep the deposit relationship and will look to provide the conventional line of credit within 12-18 months.