The Company
This Company is a leading IT service provider based in the Central Midwest, specializing in solutions for retail businesses. Its core capabilities include the installation of devices, structured cabling, as well as ongoing service and routine maintenance for its clients.
The Situation
The Company had a line of credit with a bank, but the bank informed management that it would be closing the line. The decision was based on the line’s small size and the Company’s underutilization of the credit. The Company had incurred some financial losses, a significant portion of which was attributed to equipment depreciation rather than cash flow issues, however, due to these losses, securing additional financing through another bank was not a viable option. Management was referred to Celtic Capital for assistance with the business’s capital needs.
The Solution
Celtic Capital stepped in and provided a $5 million Accounts Receivable Line of Credit, which helped the Company repay the bank and secure additional working capital for its 2025 growth initiatives. However, this deal was not without challenges.
One key issue involved securing an intercreditor agreement with a debt holder. While this is a standard procedure, the process became more time consuming and complex for this deal due to the Company’s usage of a large law firm, which required extensive legal negotiations and multiple rounds of revisions.
Additionally, the Company’s accounts receivable presented a challenge. The receivables were categorized into four different types of billings, not all of which met Celtic Capital’s eligibility criteria. Thanks to the Company’s expertise in IT, it was able to thoroughly organize and clarify its accounts receivable aging’s, making it easier to align the documentation with funding requirements.
The Result
Going forward, with a goal of getting its administrative costs in line and the expectation of modest growth through new business opportunities, the Company expects to get closer to profitability in 2025.
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.