FREE MEMBERSHIP Includes » ABL Advisor eNews + iData Blasts | JOIN NOW ABLAdvisor Gray ABLAdvisor Blue
Skip Navigation LinksHome / News / Read News


Rosenthal Provides $3.5MM and $500K Production Finance Commitments for Home Furnishings Company and Government Contractor

January 12, 2022, 07:38 AM

Rosenthal & Rosenthal competed two recent financing commitments, a $3.5 million purchase order finance commitment to support the production financing requirements of a New York-based home furnishings importer and distributor as well as a separate $500,000 work in process production commitment for a government contractor specializing in personal protection wear.
Both financing arrangements supported the efforts of women-owned and operated businesses and entrepreneurs. Without these purchase order and work in progress financing alternatives, the companies would not have been able to execute on the larger sales opportunities they were experiencing.
In the first transaction, the home furnishings company had obtained larger orders from several big discount chains that were seeking to support minority-owned businesses. While the sales opportunity was highly incremental, the company was simultaneously coping with the effects of supply chain and logistics delays which had the potential to negatively impact the company. The delays the company faced, so common today among most importers, was creating a strain on cash flow and limiting their ability to obtain additional amounts of credit from their overseas suppliers. When paired with the company’s existing asset-based lending arrangement, the purchase order facility allowed the company to fulfill the sales program and ensure the on-time delivery of the products. Cash against documents were used to fund the purchase of product from the company’s overseas supplier and the facility as well as fulfillment and logistics costs. Rosenthal’s advance rate was 100% on the cost of the presold inventory.
“This deal is a great example of how alternative financing solutions like purchase order financing can help companies address the supply chain and logistics challenges that so many businesses are struggling with right now,” said Jennifer Draffkorn, SVP, Portfolio Manager for Rosenthal’s Purchase Order Financing division. “Rosenthal’s purchase order financing program was able to help this company alleviate cash flow strain, maintain a sound supply source and keep their credit terms in balance with suppliers so they could successfully execute on incremental sales opportunities.”
In the second transaction, a government contracting business based in New York won a contract with a branch of the U.S. military to manufacture safety apparel. The contract terms required that the vendor be a woman-owned business and that the apparel be made domestically. Through a referral by the company’s CPA firm, Rosenthal was introduced to the client to evaluate and develop a financing solution. The company faced a host of challenges, including the coordination of purchasing raw materials from domestic fabric and material suppliers as well as payment to a domestic manufacturer for the cutting, making and trim costs required to complete the finished apparel. Rosenthal’s advance rate was 100% on the cost of the presold inventory.
The deal involved structuring and providing a combination of supplier purchase guarantees and cash payments to facilitate delivery of all required materials needed to complete and deliver the products under the contract with the U.S. military. Rosenthal introduced and worked in conjunction with a third-party government accounts receivable financing company on this transaction. The accounts receivable financing solution created access to additional liquidity for the company, over and above the repayment of the purchase order financing provided by Rosenthal, which accelerated the cash flow cycle of the overall transaction.

“We’re so pleased that we were able to partner with and support two women-owned businesses and entrepreneurs to ensure they have the most flexible and effective financing solutions they need to effectively run their businesses and take advantage of new opportunities,” said Megan Flaherty, SVP, Underwriting Manager for Rosenthal’s Purchase Order Financing division. “This particular deal involved a client that was new to the government contracting landscape, so our experience with work in process financing and our expertise in navigating the intricacies of obtaining large government contracts made all the difference.”

Comments From Our Members

You must be an ABL Advisor member to post comments. Login or Join Now.