TradeCap Partners Structures $1.6MM PO Finance Facility for West Coast Soap Importer

TradeCap Partners closed a $1.6 million purchase order facility for a West Coast-based importer of soap products.

TradeCap’s collaboration with the company’s bank and a factoring partner resulted in a debtor carve-out that paved the way for the fulfillment of orders. The company’s existing line of credit with the bank was fully utilized, leaving no availability to capitalize on a growth opportunity with a former retail customer. Demand for household cleaning products had significantly increased as a result of the COVID-19 pandemic, leaving the retailers’ shelves empty and out of stock. The retailer sought out former vendors that could help ramp inventories in response to the crisis. The company contacted its bank for an increase to its line but given the immediate financing need, the bank was unable to accommodate. The company’s banker reached out to a factoring partner that in-turn made the introduction to TradeCap.

The company’s Latin American supplier required goods be paid for prior to release at a U.S. port. Quantities being purchased to fulfill the purchase orders required multiple shipments and the company needed a solution to ensure continuous shipments with no delays.

TradeCap worked with the bank and factoring partner to structure a debtor carve-out allowing TradeCap and the factor to support the working capital needs associated with the retailer’s orders. Intercreditor agreements were established with the bank and factor and TradeCap began funding in a week.

TradeCap’s facility was structured using documents against payment to support a continuous flow of funds to the supplier as shipments were made. TradeCap also included availability to pay for related inbound ocean freight and outbound inland freight costs. Goods were shipped to a cross-dock facility where they were broken down and shipped to the retailer’s distribution centers across the country. Following invoicing, the factoring partner advanced against the resulting receivables to take-out TradeCap’s purchase order financing and bridge the collection cycle.

The collective effort of the bank, factor and TradeCap resulted in a creative solution for the client. The company executed on the unexpected growth opportunity and the structure will allow them to continue supporting increased demand from its retail customer.

“This was a perfect example of a banker going the extra mile for their client,” Clinton Stanton, managing partner at TradeCap, said. “The willingness to help a longstanding client allowed them to secure a creative solution that will help them grow profits and their balance sheet. We’re grateful for the opportunity to be a part of the solution and for the trust of the bank and factoring partner.”