Well-Structured, Custom Financial Solutions for Small and Medium-Sized Businesses (PART III OF III)

Ten ways US Capital Partners overcomes common financing challenges for its clients and engineers prompt, innovative, and reliable finance solutions outside the “bankable box.”

Part III, the last of this series, explores four additional special situations in which US Capital Partners is able to provide innovative, market-leading financing solutions for smaller businesses.

7. Constraints from an Existing Financing Structure

Small and lower middle market businesses sometimes find themselves restricted by stringent loan covenants or the ill-conceived terms of an early venture capital tranche. Last year, a diversified business holding company needed additional debt financing. However, the holding company’s operating subsidiaries already had maximum leverage, and any additional leverage in those businesses would trip existing loan covenants. Using the holding company’s stock as collateral for added leverage, US Capital Partners was able to provide $10 million in further term loan financing for the holding company, while the company’s existing operating subsidiaries remained fully in compliance with their respective loan terms.

8. Absence of a Personal Guarantee

Many traditional banks are unable to provide a small-business loan without the support of a personal guarantee. Last quarter, 39% of smaller private businesses with financing from an outside source reported having business loans that required a personal guarantee. By contrast, US Capital Partners regularly designs and provides debt facilities for smaller businesses that do not require any personal guarantees.

9. Distress/Workout Situations

Following weak harvest years, a California-based international produce supplier suffered a dip in earnings and cash flow. This coincided with the company’s bank becoming severely weakened during the economic downturn. Faced with liquidity issues, the bank was no longer able to provide the seasonal “over-advance” it had made available for the past ten years. Now unable to pay its vendors, the company was under serious financial pressure, which triggered a bank workout. US Capital Partners quickly engineered a workout plan for the company, negotiated a successful exit from the bank, and helped the company secure $7 million in additional financing.

10. When Time Is of the Essence

If a business finds itself short of working capital, is pursuing an acquisition, or is in distress or workout, it will usually need financing without any delay. US Capital Partners understands the need to close quickly, and has an expedited transaction process. Recently, for example, US Capital Partners provided a $500,000 bridge loan for Chellino Crane, Inc., an Illinois-based crane rental and operating business, in less than five days. The bridge financing allowed the business to purchase additional equipment promptly, to execute on new contracts.

US Capital Partners looks at every aspect of a business to provide well-structured, custom financial solutions for its clients. Often, it is able to increase availability through the discovery of credit enhancers and ways to mitigate credit risks. The firm’s non-formulaic approach and in-depth analysis allow it to provide the best financing available, not only for companies in excellent financial condition, but also for businesses that may have been refused credit by traditional lenders.

Jeffrey Sweeney