nFusion Capital provided a $2.5 million factoring line of credit to a New York-based company that provides educational staffing services to children with special needs in public schools.
The company provides individual services to more than 300 students in more than 25 schools each year. It provides qualified teachers who are certified in either literacy or special education and bring resource room services into schools. Using the Common Core State Teaching Standards to determine instructional goals, the company’s teachers have assisted students from kindergarten through 12th grade in math, literacy and test-prep instruction.
Since the client’s contract is with a state government agency, it can take 45 to 60 days for it to receive payments, creating a cash flow squeeze. Other financing providers were unable or unwilling to provide funding due to the company’s single debtor concentration, its dealing with a public agency and New York’s heightened legal, licensing and disclosure risks. In addition, the company had taken out merchant cash advance loans which needed to be satisfied and that were constricting cash flow.
Steady cash flow is key to solving the client’s biggest challenge: recruiting and retaining qualified staff to provide services and keep up with demand. Its existing line of credit was insufficient to meet its working capital needs, making it impossible for it to meet payroll and other related business expenses. The company needed a larger, more sustainable option for working capital, so a broker referred it to nFusion Capital.
