Borrower Advisory

Freight, rigging, foundation work, electrical, tooling and training add $112,000 to a machine quoted at $600,000. What a lender will advance against those items decides whether the buyer writes a cheque at closing.

An employee-owned engineering firm buys back $1.2 million of shares this year and $4.7 million in year ten, against free cash flow that grows from $3.0 million to $4.65 million. The obligation is certain, dated, and rarely financed.

A contractor financing a $12 million acquisition can sign an unlimited guarantee, a guarantee capped at 35 percent of the facility, or none at all. The structures differ by millions of dollars of personal exposure and by about 250 basis points.

A software company draws $3.8 million against a facility sized at five times MRR. One bad quarter cuts MRR 21 percent, and availability recalculates to $3.42 million, putting the limit $376,000 below the balance already drawn.

A specialty retailer carries $10 million of inventory at cost. An appraiser values it at $5.37 million in an orderly liquidation, and the lender advances 85 percent of that, which is 46 cents on the cost dollar.

The largest North American companies improved their cash conversion cycle by 0.2 days last year, entirely by paying suppliers 2.9 days later. For a $20 million supplier, a 15-day extension ties up $822,000 and costs about $74,000 a year.

A $420,000 laundry package at zero percent over 48 months costs $420,000. Financed independently at 9.5 percent, the cash price has to be 17.1 percent below list to match it. At a 10 percent discount it costs $35,834 more.

A food manufacturer owes $4 million in 90 days with nothing new to show for it. Five funding routes against the same balance sheet produce $800,000 to $4.1 million, and only two of them close in time.