Obtaining a line of credit from a commercial bank if you are a distributor in the agriculture, meat and seafood industries can be a bit more challenging.Why?
Laws have been established which provide lien status to certain suppliers in these industries which trumps the priority liens over accounts receivable granted a borrower to its senior secured lender. As a result, banks and other commercial finance companies tend to shy away from lending money to anyone but the most creditworthy borrowers from these industries. Poor margins, insufficient net worth, too much leverage or too much concentration? No bank loans for you!
So if you are a distributor in the agriculture, meat and seafood industries, what alternatives for lines of credit exist if you are a less than perfect credit?
I work with a non-recourse factor who loves to finance distributors in the agriculture, meat and seafood industries. By purchasing the invoice rather than lending against it, the factor controls the security interest in the accounts receivable even when the distributor has failed to pay its supplier.
This particular funding source provides non-recourse factoring lines of credit in amounts starting at $1.0 million. The effective cost of this money ranges from 15-18% which is more than competitive with the most aggressive factoring rates from even recourse factoring!
A key to obtaining this financing is to have a well balanced list of customers whose creditworthiness can be readily confirmed.
If you are a distributor in the agriculture, meat or seafood industries and need help finding the right lender or telling your story the right way, read "Matchmaking for Business Loans" and give me a call!
Tags : agriculture , meat , seafood , distributors , accounts receivable , recourse factoring , PACA liens , PSA liens , lines of credit , credit insurance
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