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Designing a cash flow solution for a screen printing company

Accounts Receivable Line of Credit
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T-shirt on screen printing machine getting ready to be printed on

Situation

Started in the owner’s garage as a t-shirt printer, this early stage company operated without a line of credit as they were able to self-finance working capital. After only one year in business, the company experienced tremendous growth from expanding into embroidery, promotional items, and more complex screen printing. In order to support the growth, the owner approached a local bank for a working capital line of credit. Although the company was marginally profitable, it did not generate enough cash flow to justify a bank line of credit. Instead of declining the company’s request, the banker wanted to build a relationship and referred them to Magnolia Financial.

Solution

After meeting with the company and understanding the business, Magnolia Financial extended a $200,000 Accounts Receivable Line of Credit. The funding provided by Magnolia is allowing the company to take on additional orders that they previously could not due to a lack of cash flow. The referring banker was also able to get the deposit relationship making it a win-win for both the bank and the company. Based on the company’s projections and increased profitability, their new banker expects to be able to get them approved for a traditional line of credit within 12-18 months.

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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