TradeCap Partners closed a $3 million purchase order funding relationship with a women’s accessory company in the Northeast.
The company’s asset-based lender sought out TradeCap to provide a short-term bridge solution to supplement cash flow constraints of its client. Cash flow was tight as a result of seasonal inventory build coupled with increased outlays related to an acquisition. The lender had been providing financing under a traditional ABL formula and recently agreed to an over advance accommodation to support the said build. Unfortunately, the over advance need grew.
Availability under the borrowing base combined with the over advance did not provide sufficient liquidity to meet cash flow requirements. Payables with suppliers were stretched and the company was unable to keep payments flowing to suppliers during the most critical time of the year. Suppliers began demanding letters of credit and payment for goods in-transit on any amounts in excess of terms already extended. In order to provide a comprehensive solution, the lender called TradeCap.
TradeCap underwrote the transaction, negotiated subordination agreements with other existing lenders and entered into an intercreditor agreement with the asset-based lender within a week.
TradeCap’s facility provided both letters of credit and cash payments against documents to international suppliers. Cash funding for freight, duties and other direct costs was also incorporated to further reduce cash flow constraints.
TradeCap’s purchase order finance facility provided the added liquidity needed to meet increased cash requirements and execute and deliver under the seasonal orders.
Bryan Ballowe, managing partner of TradeCap remarked, “This in another example of TradeCap’s ability to react quickly to the Purchase Order Funding needs of our clients and execute a complicated underwriting engagement.”