Bridge Financing allows a company to access capital very quickly when timing is of the essence. These situations are either when a bank or asset based lender cannot finance as quickly as needed, or when a company is seeking equity or when cash is required to complete a leverage buyout. To learn more about this service that Prestige Capital can provide, please contact us today!
During this time a client is usually in a tremendous cash crunch or behind in filling orders.
The Benefits of Bridge Financing
Prestige finances companies in 5-7 days thereby “saving the day” for these companies.
Many bankers refer clients when they are unable to finance a deal as quickly as possible. In these situations Prestige can literally “save” the client from either going out of business or from being unable to fulfill their orders in a timely manner, thereby jeopardizing their client relationships. Once the client has obtained the bridge financing from Prestige, it then gives the banker time to close their loan without the added pressure placed by the client on closing quickly.
Investment bankers and other referral partners refer clients when they know that timing is of the essence and the more traditional lenders who are working on closing the deal are taking too long.
Here are some samples of Bridge Financing transactions that we have funded that illustrate how nimble and flexible we can be to save a deal:
An investment banker contacted us with a leverage buyout opportunity that suddenly became time sensitive.
Reason being, the previous funding source worked for months trying to approve the loan and the buyout structure. They were “dragging their feet” thereby jeopardizing the purchase opportunity.
When the investment banker advised us that the buyer was fearful of losing the purchase he asked if we could close this complicated 17 million dollar multi-company leverage buyout in less than two weeks.
With “all hands on deck,” we were able to close the deal within this time frame, saving the deal and earning us the admiration of the client, seller and investment banker.
Bridging the Gap with Prestige Capital
We agreed to allow the client to exit our facility after 3 months with no break-up fees whatsoever. This will allow the client the option of obtaining more traditional financing now that the pressure is off and the company has been purchased.
Another bridge financing deal was referred by a banker whose client was in the food industry. She stated that while her underwriting would take 3-4 months, the client was pushing her to get it done sooner, and she was fearful that the client might start to “shop” various other lenders and she would lose the deal.
At the Summer Fancy Food Show last month, this client gave me a huge hug and told me that had it not been for Prestige stepping in when we did, they would not have been able to fulfill these orders during their high season and they would have lost face with their clients. As a result of that, those orders have grown tremendously since that time.
Similarly a banker called last week to discuss the following scenario. Her client, who has a seasonal business, has orders flying in during the summer months faster than she can get the product out the door. As this bank will also take at least 3 months to underwrite, the banker suggested that Prestige step in and finance the existing orders to keep the pipeline of business growing without a stop. The client was thrilled that this was an option (she had been unaware that bridge financing existed) and we were able to provide quick access to the capital that she needed to continue to grow sales during this season.
As a non-bank lender, Prestige is able to provide capital this quickly as our underwriting is NOT on the company itself.
We underwrite the client’s customers and simply need to obtain a first lien on the assets for the period of our financing. (Additionally, a personal background check is important to us as we want to be sure that our clients’ character is not an issue.)
Prestige is one of very few factoring companies that provide bridge or short term financing. While most factors require a client to enter into contracts with long terms ranging from 12 to 36 months, Prestige will consider a term as short as three months. Bridge financing is usually utilized when a client is awaiting imminent funding from a third party but requires capital until that funding actually takes place. A primary example is a company in the process of receiving a line of credit from a bank or finance company. Prestige will fill the gap of 3-4 months of providing liquidity to the company until the permanent financing is underwritten, documented and closed. Another example is a company that requires short term liquidity while it is in the process of raising equity. In both of these examples , Prestige will work with all parties to ensure a smooth transition once the final financing is achieved at which time Prestige exits the picture.