Earlier this year, the owner of a plastics injection molding business in Northern Ontario approached his banker about obtaining a working capital line of credit to help cover cash flow shortfalls. "Our banker wasn't able to accommodate our financing request, but he did refer us to FVF" says the owner.
FVF set the business up with a $750,000 A/R based line of credit to help cover the cash flow shortfalls. With FVF's support, the owner is now confident that he can continue to grow the business without the fear of running out of cash.
Growing a business through acquisitions takes capital and usually lots of it. An Ontario company that specializes in manufacturing fixtures for retail stores was growing rapidly by acquiring other similar businesses. The problem was that the acquisitions required the business to buy new equipment, which banks are hesitant to finance due to the rapid expansion.
Fortunately, the company's bank referred them to FVF, which established a factoring facility that is now providing the capital to buy the equipment needed for the company to continue its growth through acquisition strategy. By factoring receivables with FVF, the company has regained control of its cash flow. Factoring has been the perfect financing solution for this fast-growing business.
A company that manufactures and sells air filters experienced rapid growth last year, but the growth wasn't evenly spread out - it doubled its sales over the summer and again for a couple of months last winter. The company had a bank line of credit in place, but it soon became clear that it wasn't the right tool.
FVF was able to help the company by working with its bank to substantially pay down its line of credit so they could release the Accounts Receivable. After two years of struggling because of their two busy seasons, the company has the best of both worlds. They can take advantage of bank financing during the slow times and factoring when it gets crazy.
For businesses that deal with law firms and insurers, the question isn't necessarily if they will get paid, but when. To cover cash flow gaps caused by slow-paying clients, a startup court reporting company in Ontario approached FVF on a referral from its banker.
"We don't have the track record or financials needed to qualify for a traditional bank line of credit," says the owner. "This makes an A/R based line of credit from FVF the right solution for us. It provides the working capital we need, especially as we're ramping up this new business quickly."
The owner explains that he and his partners have put substantial equity into the business. "But we want to use our equity to grow and expand our footprint, not finance working capital. FVF also wants us to grow so they can lend us more money, so it's a perfect fit."
When an Alberta fabrication business that specializes in welding and fabrication for tanks and vessels began landing larger contracts last year, it was thrilled about the new business and additional revenue. However, it struggled to cover the cash flow needed to purchase materials and equipment that were needed upfront to perform the jobs.
"We're a small company and didn't have the collateral our bank required. Fortunately, our banker wanted to help us, so he referred us to FVF."
Six months later, the business is thriving. "FVF has provided the cash flow we need to take on these big contracts and continue to grow the business," says the owner. "It's perfect for smaller businesses like ours that don't have the scale banks are looking for."