Accounts Receivable & inventory Line of Credit

Plastics and Compound Manufacturer

Situation

This plastics and compound manufacturer provides raw materials to companies that produce a variety of colored plastic products.  Historically profitable, the company expanded their product line in early 2020 to include black resins.  Soon after they began to ramp up, the COVID-19 pandemic arrived, and many of their customers temporarily shut down production.  As a result, reveunes dramatically decreased, and the compapny reported losses for multiple months.  As their customers opened back up, the company needed additional working capital to support the increase in business.  However, their bank was unwilling to increase their line of credit that was already maxed out.

Solution

Magnolia Financial extended the company a $1,500,000 Line of Credit secured by both Accounts Receivable and Inventory.  The funding provided by Magnolia not only paid down the bank's exposure but also gave the company additional working capital to support the turnaround.  The bank was able to keep the deposit relationship as well as the building and equipment loans.  The company now has sufficient working capital to execute its growth plan and anticipates an imminent return to profitability.  Neither would have been possible without the Accounts Receivable and Inventory Line of Credit from Magnolia Financial.    

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