Accounts Receivable Line of Credit
A manufacturer of specialized packaging for automotive and other industrial customers was established in 2013 as a U.S. subsidiary of a foreign parent company. As the domestic entity continued to grow, they approached their local bank for a traditional line of credit. With historical losses and significant negative equity (due to trade payables owed to the parent company), their bank was unable to provide the funding. However, in an effort to build a relationship for the future, the banker introduced Magnolia Financial as an alternative solution for the interim.
With significant experience funding domestic subsidiaries, the Magnolia team easily identified the company’s growth opportunity. Instead of focusing on the historical losses and deficit equity position, Magnolia recognized the value of the company’s customer relationships and structured a $1 million Line of Credit secured only by the company’s Accounts Receivable, with no Personal Guarantees. The funding was used to not only support growth but, also to reduce the trade payables owed to the parent company. After just 12 months of funding with Magnolia, the company was able to secure a traditional bank line of credit with the bank that initially referred the deal to Magnolia Financial.
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Kerry Coker, KAMADO JOE
"The Magnolia guys have a real ‘can do’ attitude. Marc Smith and his team are super responsive and upbeat. They can fund within a matter of days. They are always looking for positive opportunities for their clients. It's a breath of fresh air to work with someone like that."
Frank Workman, Dealers Supply & Lumber Company
""Magnolia was really available when we needed them, and the leadership at Magnolia was empathetic to the cold, harsh nature of traditional banking. It gave us a tremendous amount of comfort during a difficult time. Marc Smith and his team really understood where we were, where we were going and gave us the help we needed to get there.""
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