Why “Big Banks” Are Turning Down Working Capital Lines of Credit at a Record Pace (Part 2)
- Our client’s business changed from job to job (due to cash flow limitations) to a significant backlog of work.
- Multiple contracts were awarded at good margins and suppliers were paid in advance of terms creating payment discount opportunities and increasing profit margins on already profitable jobs.
- Sales went through the roof. Typically, Capstone’s clients grow on average by 15% to 20% per year. This client went from $5,000,000 in sales per year to $13,000,000 in sales per year.
- Remember that pesky term loan for $1,500,000? The loan balance as of the end of the 3rd quarter was below of $750,000. The bank was (and still is) happy to have us involved and began referring other clients to us who had similar problems.
- Fortunately for us, this is the norm for our clients rather than the exception.