The Company
This Company is a Central-Midwest manufacturer of hex keys of various sizes. It was founded in 1923, and descendants of the founders are still involved in running the business.
The Situation
For the past couple of years, though the balance sheet was in good shape, the Company has had trouble with its P&L. Due to recent covenant violations, its bank looked to exit the relationship. The Company had a small drop in revenue, but the biggest issue was on the cost side. With a concern over the availability of raw materials, the Company pre-purchased a large amount of materials, which caused costs to go up significantly when revenue dropped. This led to losses and the subsequent bank exit.
The Solution
A third-party referral led this Company to Celtic Capital and its $4,897,600 financing package consisting of a $3,000,000 Accounts Receivable Line of Credit, a $1,500,000 Inventory Line of Credit, and a $497,600 Equipment Loan to pay the bank in full and provide ongoing working capital.
The Result
Inventory has been pushed back down and will continue to go down, which has, and will continue to, lead to better margins. The Company is expected to pull out of its losses in 2025. Basically, the Company’s not in bad shape; the balance sheet is fine, it’s just the P&L that needs to improve.
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.