CASE STUDY: It’s a Win, Win! A bank line of credit, guaranteed by the SBA, was not enough for this Tennessee printing company


Estimated reading time: 2 minutes

Background

Credit facility limit:
$3,000,000

General description: Commercial printing company

State of formation:

Tennessee

Customer type:

US-based manufacturing & packaging companies

Issue

This Tennessee-based contract printing company experienced accelerated growth and although the company currently maintained a bank line of credit, guaranteed by the SBA; the capital structure was insufficient to support growth demands.

Proposed Solutions

United Capital Funding proposed an accounts receivable factoring facility; which would provide a flexible and elastic form of working capital sufficient enough to grow along with increasing customer demand. Through this form of financing, the company was able to:

  • Secure a larger credit facility against open accounts receivable then they could have achieved by leveraging their current balance sheet.
  • Gain greater liquidity without the corresponding debt on their balance sheet.
  • Grow at an integral part of the company’s life cycle without restrictive covenants.
  • Work with an institution that has been in business for 25 years supporting its customers with professional AR management services to help reduce overall Days Sales Outstanding.
  • Reduce senior management’s time and energy on cash flow management and therefore, allowing an even greater focus on growing revenues and ensuring customer satisfaction.

Conclusion

The company accepted the proposal and was approved for factoring with United Capital Funding. The above relationship between UCF and its client will prove to be a very profitable capital structure.

Due to increased revenue; stable gross margins and relatively flat fixed expenses, our client should generate the additional profitability which will only increase shareholder value. By working with UCF; our customers gain the additional working capital necessary to support continued growth  and seek additional business in new verticals and markets.


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