Three months ago Factors Southwest closed a line of credit for a distribution company, whose LOC at a bank was frozen due to an over advance. The distributor had a very successful business and then comes the “credit crunch”. With the real estate bubble bursting and businesses failing, the distributor’s customers started reducing orders and taking longer to pay. Some customers even went out of business which didn’t help the distributor’s over advance on the line of credit.
To the rescue comes Factors Southwest! Factors Southwest was able to work with the distributor and the bank to pay down some of the existing line of credit in exchange for a subordination agreement. At the time, the business owner had approximately $150,000 in eligible receivables and Factors Southwest approved the client for a $300,000 line of credit to allow for growth. This week, we bumped the line of credit up to $500,000 for the distributor! With improved cash flow and access to capital, the distributor has been able to reduce the payables by half and take advantage of vendor discounts; in turn the distributor has been able to focus on sales, customers and profit!
It is very likely this business will be a bankable customer within the next year and will no longer need Factors Southwest and we will be able to report a “SCORE 2 FOR THE CLIENT”
If you are a small business wondering what loan options you have besides a bank, contact Factors Southwest. www.factors-southwest.com