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The table below provides a selection of straightforward financing solutions and CFO/accounting services we have successfully provided.
How to Finance a US Acquisition and obtain Working Capital?
Industry: Manufacture/Assembly (Reshoring) Printed Cricut Boards/Electronic
Financing Challenge: US$ 2,000,000 Acquisition in Florida and $750,000 Term Loan for new equipment and $500,000 Working Capital Required
Financing Solution: Acquisition was completed with zero down and 100% Debt Capital; that was the easy part. The $750,000 Term Loan was more difficult, but achieved through solid assumption around the forecast and good Scenario Analysis. The decision of how to set up the $500,000 Working Capital LOC is the challenge:
There are three primary ways to finance your operations in the USA. Let's discuss the advantages and disadvantages of each option.
Option 1: You can approach your existing Canadian bank and request a loan for your USA company. The advantage of this option is that the loan is in USD and may even be in the name of your USA company. However, the disadvantage is that all payments are still through international wires, with no ACH. Furthermore, Canadian banks are not equipped for or keen on lending money through this option.
Option 2: You can ask your Canadian banker to increase your existing line of credit to finance your USA company. The advantage of this option is that it is easier than option 1, and banks prefer it. However, there are several disadvantages. Firstly, it combines funds, making it challenging to track the profitability of each operation. Secondly, it requires significant administrative work to distinguish between the two payrolls and supply chains from a single cash source. Lastly, this option involves borrowing in CAD and lending to your USA company in USD, which presents a currency risk.
Option 3: This is the best option by far. Simply approach any USA bank, and working with Transactional CFO Inc., they will provide you with a USA line of credit for your USA company. This option is one of our best financing solutions for international growth financing. If you need more information, you can refer to the diagram below or send an email, and we will discuss all the advantages and disadvantages. info@TransactionalCFO.com
How To Finance a Growth Business (2 examples)?
Industry: Pharma R&D service and low-volume Manufacturing
Financing Challenge: Established Business receives "Approved 1st Choice Supplier Status" from a Large Pharma Co in Europe. The challenge is that financing is based on historical financials, and $1,000,000 working capital is required to position the company to service a higher volume of future orders.
Industry: BioGas Design and Manufacturing for Organic Waste
Financing Challenge: Established Business has completed multiple $5,000,000 successful energy plants and has been invited to bid on over 30 new contracts. The contracts have a long bid cycle, with approval coming after 18 months and involving multiple iterations leading to the final plans and final approval (so there is clear visibility and probabilities that can be assigned to each of the 30 bids). The challenge is that financing is based on historical financials, and $500,000 is required to feel confident that as the orders are received, the timing between money in and out might cause a big gap.
Financing Solution: Both Transactions have a common element: there is no signed Contract or Purchase Order to support an increase in Debt Capital.
High Growth and International Growth are challenges to finance for banks because they are looking back and reviewing year-end statements. We look forward showcasing the coming growth. We create strong financial models, projecting Balance Sheet and Income Statements into the future and base the Forecasted Revenue on strong underlying assumptions with a detailed plan supported by contingency planning for different scenarios. Securing Approval from Credit Risk is based on the right presentation of select data and a plan preapproved by experienced Bank Account Managers, all put together with a Team of Bankers, Controllers, CFO and Government Contacts - this is the Team at Transactional CFO and Financing Solutions Inc., we succeed where other have failed.
How to Finance Large Purchase Orders?
Industry: Aluminum Aerospace Manufacturing
Financing Challenge: The company has reached its maximum limit of Debt Financing and has received a $5,000,000 order from Boeing for a special project. The project is non-aviation, but well within the company's capabilities.
Financing Solution: There are various options available here. Although using ABL would extend the working capital it requires moving banks and significant amount of time and fees. After this transaction, we did take this company to ABL at a new bank. However, for this particular transaction, a separate facility was established and underwritten by an Asset Lender within the existing bank. This specialized lending department finances Purchase Orders at 80% and creates a locked deposit account to retain 100% of the Receivable. Of course, trying to figure out how to get the $3,000,000 required for the initial material order was also part of the equation all supported, and completed by Transactional CFO & Financing Solutions, please reach out to us for more info at: