Revolving facility for a growing distribution business
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Catalyst Private Credit > Asset-Based Lending > Revolving facility for a growing distribution business
The situation
A Calgary-based distributor of building products had doubled revenue in two years. Its bank operating line was capped based on prior-year statements, and the company was declining large orders because it could not fund the inventory and receivables that growth required.
The structure
Catalyst established a revolving asset-based facility with availability calculated monthly from eligible receivables and inventory, together with a small term loan against warehouse equipment. The facility was sized to grow with the borrowing base rather than with historical earnings.
The outcome
The company accepted the orders it had been turning away and grew revenue a further 40 percent over the following year. It has since returned to conventional bank financing with a substantially larger operating line.
Key terms
- Facility: revolving asset-based line plus equipment term loan
- Reporting: monthly borrowing base certificate
- Security: receivables, inventory and warehouse equipment
- Exit: bank refinance after 20 months
Why it worked
What made this financing straightforward to approve and fund:
- Availability tied to collateral, not to prior-year earnings
- Quality receivables from creditworthy trade customers
- Practical monthly reporting the finance team could sustain
- A clear path back to conventional bank financing
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Solution:
Building products distributor -
Funded:
July 22, 2024 -
Sector:
Asset-Based Lending -
Term:
20 months -
Share:
Representative financings we have structured and funded.
Have a transaction that needs certainty and speed? Talk to the Catalyst credit team about how we would structure it.
