Line of Credit Secured by AR and Inventory

Distributor of Supplies and Equipment for the Beverage Industry


THE SITUATION: The Company has been providing quality service, products, and equipment to the Beverage Industry since 1947. In addition, they offer professional refurbishment services for most major soda fountain equipment, carbonator pumps and CO2 regulators. As the economy began to crash in 2008 and 2009, the Company began to experience the effects of that slide. In 2o11, the Company was placed in special assets with their current bank due to a decline in their overall financial condition. The bank termed out their existing line and secured it with four pieces of real estate as well as the Company’s inventory. The bank subsequently referred the Company to another commercial finance company to finance their receivables. After struggling for years, the Company began to turnaround in 2016.

THE PROCESS: The Company approached a local community bank about providing a solution to their current high cost of working capital financing as well as real estate needs. After reviewing the financial package on the Company, the Bank determined their interest would be in the real estate. In offering a solution for the Working Capital piece, the local community bank referred the Company to Southeastern. After meeting with the Company and Bank, a strategic financing package was put in place by both the Bank and Southeastern. The Bank would refinance the real estate which would release the Company’s inventory as collateral. This would allow Southeastern to structure an Accounts Receivable and Inventory Line of Credit. The new line provided the Company with additional availability due to the inventory advance as well as a cheaper cost of financing.

THE RESULT: Due to the Banker providing a solution to their client, he was able to move the entire relationship, provide a real estate loan, and gain the depository relationship including treasury management services. The Banker will keep an eye on the Company’s progress with the intent of graduating the line back into the Bank after the Company stabilizes and is less reliant on the line to fund daily operations. The result was a win for all parties involved.