Accounts Receivable Line of Credit
This USA subsidiary of a foreign parent company manufacturers equipment used for storage and processing in the compressed-air and oil and gas industries. Although the subsidiary has operated in the Uinted States for over 10 years, the company was marginally profitable and maintained a deficit net worth on the Balance Sheet due to significant payables owed to the parent company overseas. The company was Factoring their Accounts Receivable as a bank could not provide a traditional line of credit since their largest customer represented a 70% Accounts Receivable concentration. In an effort to build a relationship for the future, the banker introduced Magnolia Financial as an alternative financing solution.
With significant experience funding domestic subsidiaries, Magnolia understood the nuances of dealing with foreign ownership. Despite the 70% Accounts Receivable concentration, Magnolia Financial focused on the long-term customer relationship and the strong pay history. Using only Accounts Receivable as collateral, Magnolia Financial structured a $3,000,000 Working Capital Line of Credit with NO PERSONAL GUARANTEES. The Magnolia credit facility provided the company with additional availability and also reduced the funding costs from their previous Factoring relationship. The company expects to transition to a traditional bank line of credit within 12 - 18 months.
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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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