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Giving a multi-family renovation company cash on the same day it invoices

Accounts Receivable Line of Credit
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Red multifamily house under renovation

Situation

Formed in 2019, this multi-family renovation company specializes in refurbishing and modernizing apartments for owners and property managers across the southeastern United States. Although the company grew exponentially over its first few years, they got behind on vendor payables as customers were paying in 60 days or more. In addition, the company took out high-interest cash advance loans that were restricting profitability. The owners approached a new bank for a working capital line of credit but were not approved due to a lack of cash flow and seriously past due payables.

Solution

In order to provide the company with an alternative solution, the banker referred the owners to Magnolia Financial. Despite the historical losses and stretched payables, Magnolia recognized the value of the Accounts Receivable and extended the company a $750,000 Asset-Based Line of Credit. Instead of waiting 60+ days to get paid by customers, the company now has access to cash the same day they invoice. The funds provided by Magnolia were used to pay off their high interest loans and to bring suppliers more current. The company also now has the needed working capital to continue to support growth. Best of all, the referring banker was able to win the deposit relationship and hopes to provide a traditional line of credit in 18-24 months

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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