RefinancingWhen a company enters or exits a growth stage, is experiencing financial or operational challenges, or has outgrown its current bank, it is likely time to secure replacement financing. Factoring is a very powerful financing tool and should be considered by business owners when going through periodic refinancing exercises.
Baby Food Manufacturer
Client: New York-based organic baby food manufacturer with $2 million in annual sales.
Situation: The three-year-old company was experiencing rapid growth due to large orders from big box retailers. The bank was unable to increase its small credit facility.
Need: The client needed additional cash flow to fulfill the orders and be able to take on new customer relationships.
Solution: Prestige paid off the bank and provided $250,000 in accounts receivable financing for their first assignment. Orders grew at a rapid pace, with no risk of having to turn down new orders due to a lack of cash flow. In less than a year, the client successfully refinanced their line with a low cost bank facility and grew their business more than tenfold.
Client: Midwestern U.S. manufacturer with over $1 billion in annual sales.
Situation: The subsidiary’s parent company embarked on a major capital expenditure program, resulting in restrictions on intercompany advances.
Need: Although strong financially, the client needed working capital flexibility without creating debt.
Solution: Prestige purchased their receivables without recourse through a $30 million factoring line, so the client could have access to immediate cash. As factoring is not a loan, the company assumed no debt on its balance sheet.
Client: New York-based Microsoft software consultant with $4 million annual sales.
Situation: The six-year-old company was seeking to refinance its line when it became a victim of a bait and switch scenario by an unscrupulous lender. Shortly before loan closing the company learned that the lender’s actual terms varied drastically from the original proposal.
Need: The client was in need of immediate financing and wanted a lender they could trust.
Solution: Prestige provided a fast, simple and straightforward proposal and closed on a factoring facility within five business days.
Refrigeration and A/C Services
Client: New England-based refrigeration and air conditioning service specialist with $4 million annual sales.
Situation: The fifteen-year-old seasonal business had fluctuations in sales and cash flow throughout the year. A request for a line increase to provide additional working capital during peak periods was declined by their bank.
Need: The client needed flexible working capital financing to purchase inventory and hire seasonal personnel.
Solution: Within ten days from application, Prestige provided the client with a factoring facility which provided steady and predictable cash flow and met seasonal demands.
Client: New Jersey-based third generation ready-mix concrete company with $8 million in annual sales.
Situation: The company’s bank was taken over by the FDIC which resulted in their loss of an ongoing funding source. Without a line, the 11-year-old company was unable to pay its vendors and had to scale back operations.
Need: In order to repay its debt to the bank/FDIC and secure financing to resume normal business operations, the company needed a finance company that was sophisticated enough to negotiate with both the bank and the FDIC attorneys to close the deal.
Solution: After several months of bureaucratic negotiations, Prestige factored approximately $1 million in receivables, repaying the client’s debt and cleaning up its payables so that the company could return to normal operations.