Manufacturing and fabrication
A shop with $2,000,000 of plant on the floor and a full order book is one of the easier files in Canadian commercial credit, because there is something real to lend against and the revenue is contracted.
How the balance sheet reads.
Plant and machinery carry appraisable value, which is why a sale and leaseback often releases more cash here than any revenue based facility would.
Work in progress ties up cash the income statement does not show. Lenders read the inventory note carefully.
Customer concentration is the recurring problem. Two customers at seventy percent of revenue changes the pricing.
What usually does the work here.
WHERE IT GETS DIFFICULT
- Deferred maintenance on the fleet shows up in the appraisal.
- Purchase orders are not receivables, and financing against them is a different product.
- Equipment and vehicle financingDriven by asset value, commonly $25,000 to $5,000,000 Finance sized against the asset itself, for machinery, fleet and production systems, including sale and leaseback on equipment you already own.
- Working capital and lines of credit$50,000 to $2,000,000 Revolving credit sized against deposits, receivables and inventory, for the gap between paying suppliers and getting paid.
- Term loans$100,000 to $5,000,000 and above A fixed sum advanced at closing and repaid over a set schedule, for growth, refinancing or a single large investment.
A manufacturing and fabrication file, read properly.
Tell us the amount and the purpose, and we will say what is realistic in this sector.
No lender hears your name until you say so.
A request emailed to twenty lenders leaves twenty records. The next one to see it reads the declines before they read the deal, and a file that looks shopped is priced as one. So the list is built with you, approved by you in writing, and nothing leaves this office before that.
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- 416-841-8468
- Hours
- Weekdays, Toronto time