A Southern California distributor for office furniture needed to obtain a replacement revolving line of credit. Its current bank had given the company notice of its intent to not renew its loan facility. Why? The borrower had reported a 2007 loss as a result of a one time event. Unable to find a replacement lender on its own, their CPA suggested that the owner call me at Funding 911.Funding 911 received the call with a request to help the company find the best available factoring facility with the bank’s deadline looming just a few days away.
The company has a strong business model, excellent supplier relationships, solid financial reporting systems and major creditworthy clients. A factoring facility would have been implemented easily, but could have resulted in a tripling of interest expense over the course of a one year contract.
Instead, Funding 911 introduced the company to an asset based lender who was willing to provide a revolving line of credit secured by accounts receivable.
In less than ten days, the lender issued a proposal, conducted its audit and obtained its internal approvals to provide a revolving line of credit for an amount more than twice the size of the borrower’s existing bank loan facility.
The interest rate on the asset based revolver is significantly less than the cost of factoring. The borrower could save as much as $250 thousand and more in interest expense over the course of a one year agreement!
The office furniture distributor is now focused on what matters most – running a successful business instead of running around looking for financing.
Need help finding the right lender or telling your story the right way? Read "Matchmaking for Business Loans" and give me a call!
Tags : line of credit , asset based loan , factoring , accounts receivable , interest expense , Funding 911
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