Celtic Capital Makes This Deal Work Even With an Uncooperative Fintech Lender

The Company
The company is a California-based job shop metal finishing company. It’s been in business since 1980 and has been run by the same management team since inception.

The Situation
Due to losses incurred over the past couple of years, the company’s bank limited its borrowing and upon deciding that the company was no longer a good fit, finally asked it out. As cash became tight, company management went to a Fintech lender to help get the company through until it found new financing. Even though management was told Fintech’s loan would be unsecured, it wasn’t. When Celtic Capital came in as the company’s new lender and informed the Fintech lender that we were replacing the bank, we asked the Fintech lender to subordinate. It replied, “No.” Even though we explained that they would be in the same position as before, they still said no.

The Solution
Because the Fintech lender wouldn’t subordinate, we helped the company pay it off. The owner put in $100,000; half of what was owed, and we over-advanced the company the other $100,000. The payback to us is on the same schedule the company had with the Fintech lender. Celtic Capital provided the company with a $1,750,000 Accounts Receivable (A/R) Line of Credit and the company’s A/R supported paying off the bank.

The Result
Company losses were due to one-time expenses relating to new programs to customers. Now that expenses are back down, the company expects to become profitable on current revenue, and the P&L should turn around pretty quickly.

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 mhafner@celticcapital.com, or visit us at www.celticcapital.com.