The line of credit refinancing provided the core business with the liquidity needed to get back on track after COVID, with steady, profitable growth.
Background
After years of profitable growth, management spotted an opportunity to develop and launch a new consumer product line for avid cyclists. The initiative required an investment in design, tooling, inventory, and a website, and the plan was to fund those costs from core business earnings. COVID unexpectedly pulled the rug out from under the core business, and management was forced to fully draw on the company’s line of credit to complete the project. Now the company needed to prioritize funds procured from the line of credit to rebound from COVID. Using the line of credit solved one problem but left the company without the liquidity needed to rebound from covid.
Our Solution
The Business Development Company met with the company’s management team and the bank to facilitate an agreement by the bank to term out the $250,000 line of credit balance, provided the line of credit would remain available for the company’s future use. Showing confidence in its client, the bank provided that assurance.
Results
The line of credit refinancing provided the core business with the liquidity needed to get back on track after COVID, with steady, profitable growth. Management subsequently obtained funding to spin off the new product line as a separate entity.