Email this pageAccounts Receivable & Inventory Loans - Revolving Line of Credit
Deschutes Capital structures and arranges working capital revolving lines of credit and working capital
loans for accounts receivable financing and inventory financing tailored to meet your company's specific seasonal and growth needs. We are able to provide financing to a wide variety of industries and business credit profiles.
Advance rates for lines of credit secured by accounts receivable depend on the creditworthiness of your customers and the amount of dilution (returns, uncollectible, etc.) that your company experiences, but typically range from 60% to 85% of your accounts receivable. Advance rates for lines of credit secured by inventory depend on the orderly liquidation value ( OLV ) of your inventory and the level of your inventory relative to the amount of your accounts receivable outstanding and annual sales, but typically range from 30% to 65% of the cost of your inventory. Higher advance rates can be achieved to the extent that a creditworthy buyer can stand by to purchase the inventory upon request or the inventory can be easily sold to a broad market, even during difficult market conditions. We can also employ risk management tools, such as, credit insurance (to manage credit risk exposure to customers), inventory management and other risk management tools when appropriate.
All corporate financing is based on current market conditions and the term structure of your company's balance sheet assets, CAPEX and equity; income statement and pro forma cash flow from operations or EBITDA.
If leveraged financing is needed, an asset based subordinated loan may be available that could be secured by the remaining inventory and accounts receivable in excess of the advance rate for the senior lender. The OLV of your inventory will be a consideration, as well as, the stability of your company's cash flow from operations or EBITDA. Additional considerations are the business cycle risk of your industry, seasonality of your business, and credit risk profile and concentration of your company's customer base. We can also assist with trade financing, such as, purchase order financing to leverage specific opportunities when products are pre-sold.
Lines of credit are preferred, but when necessary, factoring (that is, the sale of accounts receivable) can be employed. Factoring, as a financial tool, allows opportunities that otherwise would not be possible without giving up equity in your company. In addition, corporations can sell their accounts receivable to manage their debt to equity ratio and debt to assets ratio, since factoring is the sale of accounts receivable rather than a debt secured by the accounts receivable.
Deschutes Capital welcomes the opportunity to work with you and your company. Whether you need a revolving line of credit for working capital or an inventory loan, please submit a corporate finance inquiry form so that an account executive can call to discuss your company's financing needs.
To explore the full range of corporate financing that Deschutes Capital can structure and arrange, please go to the top of this page and click on the corporate finance service which is best suited for your company and circumstances.
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