Learn how a North Carolina staffing company used Flexent’s asset-based lending product to eliminate fees and open up growth opportunities.

A multi-state staffing company headquartered in Durham, NC funded its operations with a $2,500,000 AR based factoring facility with a large national bank. The fees and expenses with this bank became too excessive, leaving the staffing company searching for better options. Flexent, via its referral partnership with a client bank, provided an $8,000,000 ABL revolving credit facility that now allows this staffing company to grow without cash restraints.

The Situation

The staffing company started in 2001 with operations in North Carolina, Connecticut, New York, Maryland, Indiana, Michigan, and Tennessee. In 2021, company revenues approached $30,000,000, with growth continuing in 2022. Since 2015, the business has funded operations with a $2,500,000 AR-based factoring facility with a large national bank.

The Challenge

Over time, management borrowed less against the credit facility by reinvesting its retained earnings as a source of capital. The incumbent bank charged unused line fees, renewal fees, and a host of other expenses which the borrower felt were excessive.

The Problem

• The owner developed a relationship with a lender at a community bank and requested a replacement credit facility that would be less expensive.
• The replacement facility request was $3MM. The company’s owner was also planning a cash distribution and the company was experiencing increased growth. This created more reliance on the credit line for 2022.
• In addition to the request, the lender had provided a seven-figure personal loan to the owner secured by various real estate projects.
• Considering total global exposure and based on financial ratios and tangible collateral, the client bank was comfortable proposing $500,000 inworking capital for the company.
• The lender recognized the $500,000 line of credit would satisfy the $3MM request. Thus, the lender identified the trading assets on the balance sheet as a good collateral source.
• To lend on the trading asset of accounts receivable, our client bank needed to provide perpetual collateral monitoring to ensure the AR balance was accurate to support the performance of the revolving credit facility.
• Due to size and the need for collateral monitoring support, the lender referred the customer to Flexent to fund the company’s working capital needs. Flexent is the client bank’s referral partner for Asset-Based Loans and AR Finance working capital facilities.

Solution

Flexent approved and funded the $3MM request. As a result of increased sales for 2022, the facility was increased to $6MM, and most recently to $8MM. The owner opened a business DDA account with our client bank and consistently maintains a high six-figure balance. As the ABL continues to season, the client bank has the option to participate with Flexent in the loan asset.

Success with Flexent:

The lender was able to gain a total banking relationship with the customer. He used the client bank’s capacity and expertise to fund real estate and Flexent to provide the working capital solution. Access to working capital with facility increases has given this company the confidence to grow without cash constraints.