TradeCap Partners recently provided a $7.5 million purchase order funding facility for an importer of warehouse rack systems and carts based in the Midwest. TradeCap was introduced to the client by an asset-based lender who had assessed that the client’s immediate need was purchase order funding versus an accounts receivable and inventory solution. The introduction helped to not only fast track the relationship but also add further credibility to the TradeCap name in the eyes of the client. The new PO facility is being used to secure payment to the company’s overseas supplier via cash payment against shipping documents to cover overseas costs of goods to support large customer orders from a national food distributor.
The company was purchased by existing ownership several years ago and had been utilizing a small working capital line of credit provided by the Small Business Admiration as part of the acquisition. However, the company recently received significant customer orders from a large food distributor to supply warehouse rack and cart systems in over 20 distribution centers located throughout the United States. The total order was for over 70,000 systems exceeding over 400 sea containers coming from an overseas supplier.
While the company had maintained a long-standing relationship with its supplier overseas, the sheer size of the customer orders required a significant capital outlay early on during the supply chain to keep up with production since the overseas supplier was not able to extend favorable payment terms through delivery into the United States. The company’s existing working capital line with the SBA was not large enough to handle the company’s funding need. Therefore, the company was in need of a well-capitalized funding partner with experience and flexibility to move fast in order to execute to maintain production and stay on schedule to fulfill critical deliveries to the end customer.
TradeCap was able to underwrite the transaction within two weeks and obtain a subordination from the Small Business Administration related to the working capital assets specific to the customer orders TradeCap was financing. Additionally, TradeCap was able to set up a direct form of repayment from the end customer through its early pay program in place with a large U.S. financial institution.
“I am proud of our ability to execute quickly and help our clients navigate the critical aspects of implementing incremental working capital solutions in a timely manner,” Bryan Ballowe, managing partner of TradeCap, said. “Businesses who source goods from overseas rely on sound, bespoke, funding structures from well-capitalized funding partners who have experience in international trade and a proven industry track record to execute fast.”
