King Trade Capital closed a $2 million purchase order facility for a Texas-based aviation parts supplier selling to domestic and foreign military and commercial customers.

Following a transition in ownership, the company entered a new relationship with a regional bank that provided a line of credit against receivables and inventory. After closing the facility, company realized it had over-purchased parts inventory and not yet completed its restructuring efforts to reduce the G&A expenses of the business.

This placed a strain on cash flow and vendor relationships, resulting in suppliers moving from open account terms to cash in advance on new inventory purchases. Additionally, the collateral supporting the bank’s loan was now primarily weighted in slower moving inventory. The bank, interested in protecting its capital asked the company to appoint a CFO advisory firm to help management navigate the storm.

With suppliers no longer offering terms and every dollar of available cash flow needed to support operations, the advisor was in search of an additional source of liquidity. The advisor reached out to King Trade Capital.

In conjunction with the bank, King Trade Capital established a finance solution that provided the capital for the company to purchase inventory to fill their growing orders. An inter-creditor agreement was established with the bank allowing specific purchase orders to be carved out from the bank’s collateral pool. King Trade’s facility provided an added layer of capital to support cash-in-advance payments and credit enhancements to domestic suppliers for 100% of the inventory costs. The added capital allowed the company to utilize existing cash flow until restructuring efforts can be completed.

King Trade Capital provides purchase order, trade and contract finance for small to middle-market companies in the U.S., UK and Canada.