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Brightening the outlook for a specialty paint pigments business

Accounts Receivable Line of Credit
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tin metal cans with paint pigments

Situation

An American manufacturer and supplier of specialty paint pigments operating as a subsidiary of a foreign parent company was historically marginally profitable; however, the company recently reported a significant net loss due primarily to an increase in raw material costs. As a result, its local bank was unable to renew the subsidiary’s working capital line of credit.

Solution

With extensive experience funding domestic subsidiaries, Magnolia Financial focused its underwriting on the quality of the Accounts Receivable rather than the company’s financial situation. Within 24 hours of the initial meeting, Magnolia extended the company a $500,000 Accounts Receivable Line of Credit with no personal guarantees.

The Magnolia Financial credit facility not only helped pay off the existing bank line of credit, but also provided additional availability to the company. As a result, the company now has the working capital needed to execute its turnaround plan and expects to be bankable again in 12-18 months.

 

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