Creating a Complete Solution

Not all deals are easy, but even the tough ones can close with a little creativity. At Celtic Capital, we thrive on creativity. One recent transaction illustrates this very point.

Steve Shaughnessy, our Seattle-based client development officer, was referred to a manufacturer of gluten free food products. They were in violation of financial covenants and needed to replace their bank’s receivable and inventory line of credit as well as an equipment loan. They also needed access to working capital.

After his initial assessment, Steve determined the company’s collateral value was not sufficient to cover the back debt. Rather than walking away, Steve got creative. He reached out to another non-traditional lender, one who focuses on regional economic needs and job creation when making credit decisions.

By working together, Celtic provided a $1,200,000 facility on the accounts receivable and inventory, while the other lender provided a $1,750,000 loan on the equipment supplemented by a second position on the revolving assets. Unfortunately the combined financing could not retire the entire bank debt. They were $500,000 short.

Celtic counseled the company to meet with the bank. After extensive analysis and discussion among all parties, the bank agreed to a two year amortizing hold back of the shortfall.

When all three components of the transaction closed, the company CEO noted that Celtic was the only lender who provided a comprehensive solution, even though it took three lenders to accomplish. Many others had simply given up when they realized they could not provide enough availability to take out the bank.

Celtic’s Shaughnessy commented, “Creativity is key. Most asset-based lenders can step into a situation where there are good performing assets with enough availability to get the current lender out, but not all deals meet that criteria. At Celtic we are creative and partner with others when necessary to meet the needs of our clients”.

With over 30 years of experience, Celtic knows how to be creative and help small businesses meet liquidity challenges. We provide maximum availability on eligible assets, and, when appropriate, do not hesitate to create new partnerships with others to meet client needs. Our industry knowledge, creativity, professional contacts, and focus on the needs of clients are the keys to our success.