Medical Equipment Distributor Swaps Expensive Vendor Financing with Accounts Receviables Financing

Background

A medical equipment distribution company has been in business for 2 years. From 2006 to 2007, the company's revenue grew by over 900 percent. Low sales in the first year of the business prevented the company from getting a line of credit from a traditional bank. Therefore, the owner is forced to finance business expansion with high cost loans from vendors.

The Need

The business owner wanted an inexpensive source of funding to replace the high cost vendor financing.

Financing Solution

Based on the estimated value of the accounts receivable, Biz2Credit suggested using a line of credit against the business's accounts receivables. The company was suggested to leverage 85 percent of receivables to service new accounts and manage increased billings from existing clients with cheaper funding.

Results

• Received $150,000 at prime plus 2
• Received funding in 15 days
• Increased funding to $300,000 in 2 weeks

Benefits

• 300 basis point interest rate savings
• Faster client services
• Flexibility to add new clients
• Lower monthly payments
• Increased credit access with company growth