Industries / Manufacturing
Manufacturing: capital tied up in inventory, receivables and machines.
Job shops, fabricators, food and consumer producers, and contract manufacturers. How a manufacturer's working capital reads in the statements, where growth creates the gap, and the facilities built for a business whose assets are on the floor.
What the read looks for
4 things an underwriter reads in this trade before the application.
The bank statements are read first in every trade. In this 1, these are the 4 patterns the read is looking for, and the 4 things to have explained before you send the file.
Receivables from business customers
Manufacturers sell on terms, so deposits arrive 30 to 60 days after shipment from a list of named customers. An aging report by customer is the document underwriters ask for first, and customer concentration is the number they write down.
Inventory in 3 states
Raw material, work in process and finished goods each carry different collateral value. A lender sizing an inventory facility wants the count, the turns and what the goods would fetch if they had to be sold.
The machines
CNC, presses, lines and vehicles are appraisable collateral with a life of their own. Equipment schedules with serial numbers, appraisals if they exist and payoff balances let a lender size an equipment facility quickly.
Gross margin under the debt service
The read asks whether the margin on the work covers payroll, materials and the existing notes with room for a new payment. A manufacturer that knows its margin by product line answers the question before it is asked.
The common position stack
Growth builds the gap before it builds the cash.
How the stack usually builds in this trade, and the way out of it.
A new customer doubles orders; materials must be bought and paid for weeks before the first invoice is collected. A short advance funds the raw material; a second funds payroll on the larger crew. By the time the receivables come in, the remittances have already taken their share. The exit is a facility that matches the asset cycle: a receivables and inventory line, an equipment facility for the machines, and the positions retired at closing.
Facilities that fit
3 structures that match the trade.
Structures, not offers. Every facility is arranged through third party lenders and is subject to their underwriting and approval. Which 1 fits is decided by the file, not by the page.
Asset based lines
Availability that moves with receivables and inventory, for a manufacturer with an aging report and a count.
Read more FacilityEquipment financing and term loans
Fixed monthly payments sized on the machines and the cash flow.
Read more FacilityPrivate credit and mezzanine
Larger, longer, more structured capital for an acquisition, a plant expansion or an ownership transition.
Read moreQuestions from the trade
Answered straight.
1 customer is half our revenue. Is that a decline?
It is a number that gets written down and priced, not an automatic decline. Concentration is offset by contract length, the customer's own credit and the history of on time payment. Show all 3 and the read improves.
Can the machines carry the facility on their own?
For an equipment facility, yes, subject to appraisal and the balance owed. For a working capital need the machines are 1 leg of the collateral alongside receivables and inventory, and the combination is what produces a larger facility.
We are considering an acquisition or a partner buyout. Which facility is that?
Usually private credit or mezzanine, sized on the combined cash flow, sometimes alongside a senior line. It is an advisory mandate as much as a placement, and the first step is the diligence file, not the lender.
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Start with the file
A straight read within 2 business days.
Send the basics through the intake form: what the file supports, what is missing, and the next step if there is one. If we are not the right desk for it, we say so.