TradeCap Partners recently provided a $9.2 million production PO finance facility for a ready-to-eat food manufacturer. TradeCap was originally introduced to the company’s banker, who was helping the company find an incremental capital solution since the bank wasn’t able to directly help with the size of the company’s immediate funding need. The new production PO facility is being used to secure payment to various domestic and overseas suppliers via cash funding to cover the cost of goods, freight, duties and other logistics costs, as well as cash funding for direct labor costs to fulfill an order the company recently received from the disaster relief division with the State of Florida.
Headquartered in the Southeast, the company had been producing in its existing facility for several years. The company had been relying on its line of credit with its existing bank to fund operations and sales. However, the company recently received a large order from the State of Florida that required significantly more capital than what the existing line of credit or the company’s balance sheet could support. While the company had long-standing relationships with its suppliers, the size of the customer order and the associated costs, as well as a longer production lead times, required a significant capital outlay to ensure customer delivery dates were met. Additionally, the client’s credit lines and credit terms with its suppliers weren’t large enough to bridge production lead times to cash flow deliveries under the new order. The company and the company’s senior lender were seeking a structured funding solution with a well-capitalized funding partner who not only had production finance expertise, but the capability ability to move fast.
TradeCap was able to underwrite the company’s production capabilities and supply chain, negotiate and secure payment arrangements with the company suppliers, and negotiate an intercreditor agreement with the company’s senior lender all in time to ensure production and delivery dates were met.
“TradeCap has a unique and distinctive skill set unmatched in the purchase order funding space — especially when it comes to funding capacity and the ability to execute quickly. It’s more than just providing capital. It’s the ability to truly understand our client’s business and tailor a solution that maximizes operational efficiencies and profitability,” Bryan Ballowe, managing partner of TradeCap, said. “This skill set is a result of over 50 years of combined experience providing international and domestic funding solutions for both distributors and manufacturers located in the U.S. and Canada.”
