Sales Declines Hamper Manufacturing Equipment Purchase

Company Type:

-- Automotive Parts Manufacturer

Location:

-- South

Background:

Automotive parts manufacturer’s recent sales decline and revenue losses resulted in new loan denials from the local bank.

Situation

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.

>> Download the case study to learn more about how this automotive parts manufacturer was able to purchase equipment despite recent sales declines.

Solution

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.