Huntington Beach, CA Huntington Coast Capital structured over $1,000,000 in asset based supply chain funding with three separate providers for an importer/distributor of home saunas.
The primary products of the company are heaters and sauna cabins. The sauna cabins are constructed with quality with either Western Red Canadian Cedar or North American Basswood. The furniture grade cabins are designed to provide you with maximum comfort during your sauna session. Deep, reversible and ergonomic back rests, thicker walls, elegant details, exterior lighting and beautiful craftsmanship are just some of the luxury exclusives found in their saunas. Their heaters feature a high output combination of carbon/ceramic far infrared and full spectrum heaters.
The asset based loan solution: The company sells the heaters and saunas both domestically and internationally. Domestic sales are done primarily online direct to the consumer while international sales are handled through a distributor. The vast majority of sales are domestic and direct to the consumer. The company needed to build inventory to meet demand and grow sales. Demand was further elevated when they partnered with Jacuzzi on their sauna cabins. Jacuzzi, an internationally recognized brand, bolstered the company sales virtually overnight.
Because most of their sales were direct to the consumer, traditional asset based loans would not work for them. Asset based loans most typically require accounts receivable and inventory as collateral and in this case, would not yield the amount of capital they needed to increase purchases from their suppliers.
Supply chain financing has a slightly different approach, but gets the business to the same end, which is additional capital to cover the cost of goods. In a supply chain financing arrangement, the lender pays the supplier and gives the client up to 120 days to pay them back. It is not classified as a loan and as such, can work in conjunction with other asset based loans or bank lines the company may already have in place. It is a clever solution to meet the needs of companies looking for more capital when they are already maxed out with their traditional lenders.
There are a few qualifications necessary in order to be approved for supply chain funding. Namely, the company must have gross revenue of over 10 million dollars, showing a net profit and have positive retained earnings. While certain exceptions are sometimes made, this type of asset based loan is not available to companies in the start up phase of the business. Because it is an unsecured line of credit whereby the lender effectively becomes another vendor on the company accounts payable aging report, the credit history and financial strength of the company must be strong.
Could your company use this form of asset based loan? If so, we would love to speak with you 714-719-8966.
To your success!