CASE STUDY
Case Study: Aviation Industry $5MM Credit Facility
Refinancing existing debt and securing working capital
Aviation Parts Distributor Wins Low Cost Flexible $5MM Credit Facility
- Challenge
An aviation parts distributor needed to use the credit facility to increase inventory purchases. Most lenders restrict usage of credit facilities for inventory based on a percentage of the accounts receivables (“A/R”) balance.
The borrower had a fast collections cycle resulting in low A/R, so most lenders were unable to provide meaningful capacity on the line to fund inventory purchases.
- Cerebro Solution
To avoid using a very expensive (18% to 24% annualized rate) Purchase Order finance facility, the borrower turned to Cerebro’s lender network and RFP process. A national commercial bank offered competitive terms to cover both the refinancing and inventory purchase needs, while also keeping interest rates more than 50% below other offers with similar loan amounts and structure.
Winning Term Sheet
- $5MM Revolver Loan including $2.75MM sub-limit for inventory
- LIBOR + 5%, estimated to be 50% less than other available inventory only loan options
- 50% inventory OLEV, not tied to A/R balances
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