Company Asked to Exit Its Bank Almost Blows New Financing Deal With Its Indecisiveness
The Company
The Company is a Washington-based manufacturer of imaged products (stationary, drinkware and wall décor) imprinted with custom artwork for souvenirs, gifts and home use. It’s a seasonal business as most products are sold on cruise shops or gift shops to tourists.
The Situation
In 2017, the Company posted a significant loss. It turned the corner in 2018 but the loss triggered a violation of bank covenants necessitating its exit from the bank. The owners reached out to Celtic Capital for new financing.
The Solution
We came in during the Company’s off season and there was not enough to pay off the bank. As part of our proposal, we suggested that the bank sit back on part of its loan but we received no response and the deal languished.
We went back to the business owners a few months later and again, no decision. After receiving an announcement of Nabil Istafanous joining Celtic Capital as the new Client Development Officer in the area, the owners called Nabil. They told him that the bank was putting on the heat and that now that the Company had a new CFO in place, the owners were ready to move forward.
The Company had two loans with the bank – a line of credit and an SBA loan. The owner just wanted to pay off the line of credit so they negotiated with the bank to stay in on the SBA loan. Celtic Capital provided a $1.3MM Accounts Receivable Line of Credit and a $200K Inventory Line of Credit that paid down the bank and left the Company with excess availability for payables and working capital.
The Result
The Company has successfully turned around the P&L; it has a strong CFO and strong growth prospects. Projections show that the Company’s old credit facility wouldn’t have sufficed even if the bank hadn’t exited the client. Turns out, our financing is breathing fresh life into this business.
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.