CASE STUDY
Working Capital
Fast-growing asset-light business secures financing
An industrial services company secures working capital to grow their business
- Challenge
With service demand outpacing their existing working capital, an industrial services equipment installer needed additional financing to confidently take on new jobs. Their existing lender, a regional bank, would not accommodate a new capital ask due to the company’s lack of assets to collateralize a new loan and business growth risk in the pandemic-driven economy.
With $15MM in estimated 2020 revenue, several new contracts, and visibility on short-term income, the company was clearly positioned for growth. The business owner submitted a loan request to seek working capital from the Cerebro’s lender network so that they could continue to bid on and secure new jobs for their in-demand services.
- Cerebro Solution
Cerebro’s platform analyzed a number of possible loan strategies and outcomes, then launched a targeted search in two pools of capital: SBA lenders for an incremental loan and non-bank lenders for cash flow funds.
The best path for the business owner was a lower cost of capital, but the lower-cost SBA loan wasn’t a sure bet because many SBA lenders aren’t comfortable lending to asset-light companies. Cerebro’s data tools discovered specific provisions of SBA loans that allowed this business to receive a special qualification. Cerebro was then able to help the company secure the qualification and increase the SBA guarantee from 75% to 90%, reducing lending risk and making the loan more desirable to underwrite. Overall, the SBA loan delivered a remarkable outcome for an asset-light borrower with a sizable existing debt obligation.
The business owner ultimately selected a national SBA lending program from a regional bank as the winning provider.
Winning Term Sheet
- $3.3MM Loan For Working Capital
- 10 year incremental loan term @ 6% interest
- 95% SBA guarantee
- No additional collateral or equity requirement
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