Situation
This wholesale distributor of health and beauty care products was established almost 25 years ago, serving a diverse base of national retailers all over the United States. Despite performing well in 2025, the company’s profitability was down when compared to 2024 due to the impact of tariffs and supply chain disruptions.
As a result, their existing lender reduced availability on their line of credit and added more restrictive covenants. Seeking a more flexible lending relationship, the owner was introduced to Magnolia Financial.
Solution
Instead of focusing solely on the numbers, Magnolia took time to get to know the business owner and his leadership team. This consultative approach allowed Magnolia to extend the company a $7.5 million Asset-Based Line of Credit secured by Accounts Receivable and Inventory.
Unlike the previous lender, Magnolia Financial’s credit facility had no covenants, no unused line fees, and no prepayment penalty. Magnolia’s solution not only paid out the company’s existing lender — we also provided significantly more liquidity. As a result, the company can now focus on their growth strategy by bringing new products to market without worrying about availability from a restrictive borrowing base.
The referring bank, meanwhile, was able to generate a new deposit relationship with significant Treasury Services via a Deposit Account Control Agreement (“DACA”) at the bank. It was a win-win for both the company and their new bank. Neither would have been possible without the flexible and creative Asset-Based Line of Credit from Magnolia Financial.