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Building new financing pathways for a construction and supply company

Accounts Receivable Line of Credit
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Metal construction supplies

Situation

Established in 2013, this female-owned company distributes a variety of high-quality building materials to contractors and home builders. Historically profitable, the company suffered a small loss in 2019 and was marginally profitable in 2020. Despite the challenges, the company maintained a $600,000 line of credit with their local bank. When the company was awarded a significant contract for a new development, they approached their bank for an increase to the line of credit. Unfortunately, the bank was unable to increase the line amount. To provide the customer with an alternative solution, the banker referred the company to Magnolia Financial.

Solution

Magnolia Financial extended the company a $400,000 Accounts Receivable Line of Credit using only the new contract as collateral. The bank maintained its first lien on business assets (including Accounts Receivable) but subordinated the specific contract so Magnolia could provide the additional working capital. With the funding provided by Magnolia Financial, the company can easily fulfill the contract without the worry of a lack of cash flow. The company is now expecting a significant profitability increase that would not have been possible without the funding from Magnolia. By partnering with Magnolia Financial, the bank was able to keep the customer and the line of credit.

A Breath of Fresh Air

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.

– Kerry Coker, Kamado Joe
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