Haversine Provides Junior Capital to Factoring Companies Experiencing Growth

The Situation

Over the past year, many transportation factoring companies have experienced significant growth resulting in a need for increases in senior secured, bank lender finance lines of credit. With these also comes a need for additional capital to support funding for factoring transactions while still maintaining various financial covenants. This is a unique ‘niche’ where Haversine can help fill funding gaps!

In addition to participation options and senior secured lender finance facilities, Haversine also provides junior capital to help factoring companies grow. Our secured subordinated debt solution fills that funding gap during times of growth. Here’s how we helped a transportation factor, providing $2,500,000 in junior capital so they could increase their senior line of credit and grow their factoring platform even more.

The Haversine Approach

“You’ve made this whole process seamless...I look forward to continuing learning from your team and getting better as we continue to scale. I’m really excited about this relationship.”

- Owner, Transportation Factor

Financing & Business Issues

Financing Amount:

$2,500,000

Business Issue:

This successful factoring company servicing the transportation sector increased their portfolio by more than 30 percent and outgrew their bank line of credit. Plus, future increases are planned through 2021 and into 2022. The owners had injected money into the business and raised more expensive capital from private individuals. Their bank agreed to increase the overall facility up to $20,000,000. However, doing this required even more capital to fill the funding gap in their borrowing base structure and maintain their leverage and debt service requirements. Based on their specific financing situation, the owners needed at least $2,500,000 to retire some of their more expensive debt while still accessing the additional amount needed to fund their current and future growth.

The Win

Haversine was able to structure a revolving line of credit, in a second lien position behind their bank, giving the company the capital needed to fill the funding gap from what the bank advanced to what was needed to fund their clients every day. Additionally, the Haversine facility was set up to revolve, allowing the owners to better manage their cost of funds and capital usage with seasonality and other cash fluctuations in the business.

This new funding facility by Haversine will allow the company to continue to grow without having to worry about their capital base to fuel that growth. By working together throughout the underwriting process, Haversine was also able to help provide additional insight on reporting and process controls to improve turnover and collateral performance within the business, helping make this already great factoring team even better.