Business Capital Provides $6.5M Facility for Mechanical Contractor
Business Capital announced it provided a $6.5 million multi-tranche credit facility for a mechanical contractor that delivers design, construction, fabrication and maintenance services for plumbing, piping and HVAC systems.
Multimillion dollar projects the company has been involved with have included renovations and expansions for large hotels and hospitals and hundreds of smaller jobs that require commercial plumbing and HVAC services. The company also works on large state and municipal projects.
The company experienced a cash-flow shortage after the economic downturn, which adversely affected the construction market, worsened by taking on a large, unprofitable project during that time. The company was placed in the special assets department of the bank and instructed to find a new lender quickly. Even if their incumbent lender was agreeable to them staying, the terms of the company’s existing line of credit did not provide the company with the flexibility or full banking relationship needed to recover quickly. Because of the company’s thin margins it was critical we deliver conventional financing at an all-in interest rate of about 5%. Securing bank financing for a contractor in their bank’s special assets department, with progress billing, retention and other contractor-related issues is certainly challenging.
Business Capital was referred in by a banker and was able to understand and articulate the company’s industry and specific situation to targeted out-of-the-box, hard-to-find lending sources, and structure a customized, affordable working capital credit facility. This will provide the company the liquidity needed to take advantage of new business opportunities and future growth.