Wholesale and distribution
Distribution runs on two assets a lender can margin. That makes an asset based line the natural instrument, and it makes the ageing report the single most important document in the file.
How the balance sheet reads.
Eligible receivables typically margin at seventy five to eighty five percent, with anything over ninety days excluded.
Inventory margins lower and only where it is saleable, current and countable. Slow moving stock is worth nothing to a lender.
Import terms and letters of credit change the working capital cycle materially.
What usually does the work here.
WHERE IT GETS DIFFICULT
- Concentration in the receivable book caps the facility more often than the total does.
- Consignment and bill and hold arrangements complicate what a lender can margin.
- 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.
- Refinancing and debt restructuringMatched to the existing debt, commonly $100,000 to $5,000,000 Consolidating expensive or badly structured facilities into a schedule the business can actually carry.
A wholesale and distribution 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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