January 21, 2021
If you’re looking at a deal that has a leveraged balance sheet, temporary losses, or insufficient collateral, especially in today’s economic environment, give us a call at BDC Capital. We are here to help bankers get deals done with an array of highly flexible programs.
Listed below are three deals in New England that BDC Capital provided a fully-followed asset-based line of credit. Many times, the existing bank was able to maintain the treasury management services.
If you are aware of company with a financing need of $500,000 to $5 million and above that doesn’t fit a bank’s credit requirements, please give us a call.
Challenge: A distributor’s rapid growth exceeds banks’ leverage threshold. Founded less than two years previously, an electronics distributor with a seasoned management team needed funding beyond what was available through a conventional line of credit in order to support rapid growth.
Solution: BDC Capital provided a $5 million asset-based line of credit secured by receivables and inventory. As the company’s sales grew, BDC partnered with local banks to increase the company’s line limit four times within the first year. BDC also provided the company with permanent working capital in the form of two mezzanine investments, helping the company to quadruple sales in each of the first two years of the relationship.
Challenge: Right sizing a business after a failed rollout. A designer and distributor of solar panel mounting equipment experienced significant cost overruns and manufacturing delays with the rollout of a new product. This, coupled with the discontinuation of its overseas business, resulted in considerable losses for several years, making conventional financing unavailable.
Solution: BDC Capital provided a $3 million asset-based line of credit based on the strength of the company’s receivables. BDC worked closely with the company’s management team during this turnaround period giving the company enough time to return to profitability and eventually sell the company for a multiple of earnings.
Challenge: High priced factoring limits a management team’s ability to implement their strategy. The owner of a wholesaler of technology products leveraged the company’s assets to buy out two partners. Margins deteriorated significantly with the advent of online retailers. After several years of spotty earnings, the company was no longer bankable and forced to sell receivables to a factor to obtain working capital.
Solution: BDC Capital provide an advantageously priced, covenant light, $2.5 million asset-based line of credit secured by accounts receivable. The flexibility afforded by the structure and compelling economics provided the owner with the time and resources to transition from a low-margin commodity business to a high-margin, fully integrated solution provider. The company returned to profitability and the credit facility was transitioned to a local bank.
ABOUT BDC CAPITAL:
The oldest business development corporation in the United States, BDC Capital has been recognized locally and nationally as a leader and innovator in business lending and capital investment. More than 30 of New England’s leading financial institutions invest in BDC to help promising companies expand. Since our creation in 1953, we have invested more than $1 billion in thousands of companies in New England.
Whether the need is $500,000 or $5 million, BDC Capital provides a wide range of financing solutions. We offer asset-based lines of credit, senior debt, junior secured debt, mezzanine investments and private equity options, all of which are customized to suit the needs of a business.
Our affiliate, CDC New England, provides SBA 504 loans for owner-occupied real estate and equipment.
For more information, visit our web site, call us at 781-928-1100, or contact:
Carol C. Brennan