The Company
This is a Pacific-based distributor of shrink wrap and packaging supplies, founded in 2014, serving a base of commercial and industrial customers. The Company had established a consistent operating history and maintained modest, steady performance in recent years.
The Situation
Despite generally solid operational performance, the Company ran into a critical financing challenge after violating bank loan covenants. The existing lender responded aggressively, requesting the business secure alternative financing and ultimately initiating the appointment of a receiver.
At first glance, the situation appeared disproportionate to the Company’s actual performance. The business recently generated positive earnings and maintained a reasonably healthy balance sheet. However, tightening credit conditions and lender risk tolerance created pressure that escalated quickly.
With operations suddenly constrained and the need to secure new financing, the Company was referred by a trusted third party to Celtic Capital for an immediate financing solution.
The Challenge
While the underlying business fundamentals remained intact, several structural issues needed to be resolved quickly:
- A 2020 SBA loan required correction due to inaccurate ownership records before subordination could be achieved.
- A difficult commercial landlord relationship added complexity to the financing approval process.
- The existing receivership situation created urgency around timing and execution.
Speed, coordination, and precision were critical to restoring operational control.
The Solution
To move quickly while addressing structural hurdles, Celtic Capital’s financing process focused on resolving outstanding legal and administrative barriers while at the same time structuring a flexible asset-based lending solution.
Once all issues were resolved, Celtic Capital delivered a $1.1 million financing package, structured as:
- $800,000 Accounts Receivable Line of Credit
- $300,000 Inventory Line of Credit
The facility was used to fully pay off the existing bank, eliminate the receivership situation, and restore control back to the owners. Additional availability was positioned for ongoing working capital needs in support of the Company’s growth plans.
The Result
With the new financing in place and freed from restrictive lender oversight, management is now focused on executing its growth strategy. The business is projecting approximately 25% revenue growth in the current year, supported by improved liquidity and a more flexible capital structure.
Beyond the immediate turnaround, the new financing relationship provides a stable foundation for scaling operations and responding more effectively to market demand.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power, and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset-based financing solutions from $500,000 to $8 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.
If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at celticcapital.com.