Recent Sales Declines Hamper Ability to Purchase New Equipment and Capture New Manufacturing Contracts

Automotive Parts Manufacturer

South

The company specializes in manufacturing automotive parts. Founded in 1995 and located in the south, they had experienced recent sales declines and profitability losses.   

Opportunity To Pick Up A New Manufacturing Contract Required The Purchase Of A New Twin Spindle Lathe

The company was presented with a new contract opportunity with an existing customer. However, their existing machine capabilities would not be able to handle the scope of new work. The new contract would require the purchase of a new twin spindle lathe at a price of approximately $626,000. Due to recent sales declines and resulting profitability losses, the bank declined the company’s loan request.

Despite the recent losses, they did have a meaningful work backlog, long time in business and over $200,000 of equity in machines on their production floor.

Refinance Of Existing Manufacturing Equipment Enables Purchase Of New Lathe

Manufacturers Capital assessed their current situation and evaluated the existing equipment pool. Realizing that the company had equity in their existing equipment, Manufacturers Capital refinanced some of the existing equipment, provided cash out to use as down payment for the new lathe, provided progress payments while the new machine was on order and permanent financing once the machine was delivered.