Republic Business Credit provided a $2 million asset-based loan to a natural food manufacturer. The facility has no cashflow covenant requirements and a tangible net worth covenant that would only be tested after the first six months of the facility. Of the $2 million revolver, there was also an initial $1 million inventory sublimit to keep up with the ‘just in time’ demands of the national organic grocery providers.
The company provides several branded plant-based food and beverages to national organic grocery stores, along with several regional and independent grocers throughout California. The company’s revenues exceeded $12 million in 2019, with the aim to double revenues in 2020. The company was growing faster than its profits, cashflow negative and had about six months of runway left. The company sought an asset-based loan that would significantly extend its runway and bridge the cashflow gap, maintain its growth pace and increase the company’s value prior to its next round of equity financing. The company used Republic Business Credit’s debt as non-dilutive cash to increase its valuation ahead of its next equity raise.
“Not only are we helping entrepreneurs grow their businesses, we are passionate about helping a category that provides healthy and generally more sustainable food and beverages that don’t contain all of the preservatives we grew up with,” Jason Carmona, executive vice president of Republic Business Credit, said. “As a Californian, I am proud that our team is helping the natural food industry grow.”
Republic Business Credit partners with private equity firms, banks, accountants, sponsors, lawyers and investment banks to collaboratively support entrepreneurs across the United States. It also provides working capital solutions to help growing businesses, start-ups and companies in turnaround or recoverable distressed situations.
