Celtic Capital Worked With Exiting Bank To Eliminate Customer Upheaval in Payment Processing
The Company
This Company consists of two affiliates based in Kentucky that wholesale industrial supplies, steel, fasteners and bearings. While the business has been predominantly family-owned and operated since its incorporation in 1920, there are additional investors as well.
The Situation
For the past few years, sales have been trending down and the Company has been losing money. A third-party consultant was brought in to help management institute cost cuts but with hopes of a turnaround this year dashed by COVID-19, the Company fell out of covenant with its bank and was asked out. The consultant, then asked to help the Company exit the bank, turned to Celtic Capital for new financing.
The Solution
The bank was eager to exit this client. The challenge was that the Company used a bank Lockbox into which its lengthy list of customers made their payments. In providing the Company with a $1,200,000 Accounts Receivable Line of Credit to pay off the bank and for working capital, Celtic Capital worked with the bank to convert the Lockbox into our restricted account into which funds could be swept daily. With this arrangement in place, the Company’s customers did not have to be inconvenienced with a new payment structure.
The Result
The cost-cutting measures implemented to reduce losses seemed to be working only to be negated by the impact of COVID-19. The Company received PPP money that it’s using to help manage through the pandemic. While management is using PPP money judiciously and watching spending, will it be enough? Hopes are high that revenue will increase later this year and that the cost-cutting measures will once again pay off.
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.