Acquisition Tripped Bank Covenant of Commercial Bakery

The Company
This company is a California-based commercial bakery.

The Situation
In early 2017, the bakery owner acquired another bakery and integrated it into her current business. The acquisition was more challenging than expected and during the integration of the two bakeries, the business tripped one of the bank’s covenants. At that point, the owner sought out a new lender to replace her current bank.

The Solution
As the integration of the two bakeries resulted in some losses, the company required an asset based finance solution. Celtic Capital was invited in and provided a $3MM Accounts Receivable Line of Credit to replace the current bank and to assist in the growth anticipated from the expanded business.

Challenging to the deal was that of the over 800 bakery customers, a handful of the larger customers paid electronically into a blocked account and the rest paid by check to a lockbox. The owner wanted a lockbox arrangement but didn’t want the inconvenience and notification to her customers of starting a new payment arrangement. Celtic Capital structured a scenario in which the bank assigned the restricted account to the business and then set up a restricted account with our bank into which all payments would flow.

The Result
As a result of our creativity and flexibility, the payment process was not disruptive to the business’ customers; there was no identifiable change to where they sent payments. Additionally, while losses were incurred due to the acquisition, month over month results have been improving and projected revenue for 2018 is very encouraging.

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 the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 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, or visit us at