Spirits Branded Creator Distributor - March 2016

Don Rudnik

Location: Chicago, Illinois
Industry: Spirits Branded Creator Distributor
Revenue: $1 Million per month
Line of Credit: $500,000 Factoring and Purchase Order Facility
Collateral: All Asset Borrowing Base amount varies radically

The American Dream
The young company was seeking working capital to expand its national sales of branded, no gluten, low calorie, and low carbohydrate adult beverage. The company was out of working capital via family money and incubator grants and beginning to gain sales traction. The company revenue was $300,000 in 2014.

The Sterling Way - Financing Opportunity
Sterling (an asset based lender) was a panelist at a "shark tank" event seeking to match "Angel" Investors and young companies. The compelling entrepreneurial story, including the principal partner was overcoming serious illness, creating a product and a company was politely received - but no interest of investment by "angels." None of seven banks she had previously approached had anything but wishes of "good luck." The Sterling's BDO merely said good story, good product, we lend on collateral, please don't give up equity. Call when you have new purchase orders.

Two months later the company had purchase orders of $400,000 - year to date sales were $200,000 and a weak balance sheet. Sterling took the limited information, performed due diligence such as verifying purchase orders, immediately bonded with the spirit co-packer and funded five days from application. Fresh funding allows profit to be re-invested in the sales infrastructure with no equity dilution.

This young company is able to self-finance some small sales but for large shipments they would have otherwise not been accessible, Sterling relationship managers and company owner quickly act to fund the production of product using purchase orders as collateral and then provide additional working capital under 85% advance rate when it becomes an account receivable (proof of delivery). The initial draw based on purchase orders was $200,000 and grew when it became an account receivable. Our facility was flexible to meet demand of company orders.

Sterling Commercial Credit provides asset based lines of credit with full dominion of funds flowing daily into the lockbox to minimize the cost of borrowing as well as factoring. The flexible nature of factoring works well until sales stabilize. Sterling prides itself on a relationship based partnership that allows maximum access to working capital for our growing entrepreneur.

Donald M. Rudnik
Business Broker