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Infusing cash flow into a chemical distribution company

Accounts Receivable Line of Credit
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Two hands holding a scoop of polymers

Situation

This two-year old company distributes chemicals and polymers specifically to the plastics industry. Formed by two executives with significant industry experience, the company was able to ramp up quickly and was on the verge of profitability. The early success made it difficult to keep up with the customer demand due to limited trade credit with their raw material suppliers. In order to fund this new growth, the owners approached their local bank for a working capital line of credit. Because the company was new and yet to show a profit, their bank was unable to approve the request. In order to provide an alternative financing option, the bank referred the company to Magnolia Financial.

Solution

Although the business was new and not profitable, Magnolia understood the situation and the strength of the company’s customer base. Within 24 hours of the initial meeting, Magnolia Financial extended the company a $300,000 Accounts Receivable Line of Credit. Instead of waiting 30, 45 days, or more for their customers to pay, the owners now have immediate access to cash the day they invoice. Using this accelerated cash flow provided by Magnolia, the company can now pay suppliers quicker, allowing them to fulfill new orders on a more timely basis. Neither would have been possible without the Accounts Receivable Line of Credit from Magnolia.

Available when we needed them

Magnolia was really available when we needed them, and the leadership at Magnolia was empathetic to the cold, harsh nature of traditional banking. It gave us a tremendous amount of comfort during a difficult time. Marc Smith and his team really understood where we were, where we were going, and gave us the help we needed to get there.

– Frank Workman, Dealers Supply & Lumber Company
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