Accessing Capital for Expansion in a Competitive Manufacturing Industry
Overview
For small and middle-market manufacturing companies, access to capital is crucial to keep up with demand, invest in equipment, and fuel growth. One of our clients, a mid-sized manufacturer specializing in precision parts, was facing an exciting growth opportunity. Demand for their products had surged, but without additional capital, they risked missing out on new business. When traditional banks were unwilling to extend financing due to the company’s variable cash flow, they turned to Kala Financial for help.
Challenge
Our client was experiencing increasing orders from both existing and new customers. However, scaling their production to meet this demand required significant upfront investment in new machinery and additional workforce.
Traditional banks viewed their fluctuating cash flow as a risk, despite the company’s profitability and established client base. Multiple loan applications were denied, with banks citing concerns about inconsistent revenue cycles typical in manufacturing. This left our client in a bind—they had the opportunity to grow but lacked the financial support to make it happen. Each loan rejection felt like a missed opportunity for expansion.
Without the necessary capital, they risked stalling growth, impacting revenue and relationships with customers relying on their timely production. Our client knew they needed a financial partner who understood the manufacturing sector and could look beyond traditional banking metrics.
Here's How We Addressed This Client's Needs
Solution
Realizing they needed specialized financial support, the client reached out to Kala Financial. Kala Financial’s team assessed the financial situation within days and determined that the company’s strong client relationships and growth potential made them an excellent candidate for expansion financing. Here’s how Kala Financial approached the challenge:
Fractional CFO Guidance on Financial Reporting:
- Kala Financial provided a fractional CFO to enhance the client’s financial reporting. The CFO worked closely with the internal team to create comprehensive cash flow forecasts and clear financial statements that highlighted growth trajectory and profitability. This refined reporting package was designed to address potential lender concerns, showcasing the company’s long-term stability and financial health.
Introducing the Client to a Network of Lenders:
- Leveraging its network, Kala Financial introduced the client to lenders and private investors experienced in financing manufacturing companies. These financial institutions were more familiar with the nuances of the manufacturing sector and were willing to consider the client’s potential rather than focusing solely on cash flow variability.
Negotiating Favorable Loan Terms:
- Kala Financial not only connected the client with suitable lenders but also negotiated terms that aligned with the company’s financial capacity. By securing a structured loan with manageable repayment terms and a lower interest rate, Kala Financial ensured that the financing would support growth without straining cash flow.
Results
Within six weeks, our client secured a $5 million loan from a lender introduced by Kala Financial. This capital allowed the company to purchase new machinery, hire additional skilled labor, and ramp up production to meet the increased demand. With a structured repayment plan and cash flow forecasting from Kala Financial’s fractional CFO, they were able to integrate the new capital without disrupting operations.
As a result, production capacity increased by 30%, and revenue grew by 25% within the first six months of scaling operations. The additional resources also enabled faster order fulfillment and improved customer satisfaction, strengthening relationships with key clients.
Impact
This experience underscored the importance of having a financial partner who understands the specific needs of middle-market businesses, especially those in industries like manufacturing, where cash flow may not always be steady but growth potential is significant. Thanks to Kala Financial’s guidance and connections, our client was able to unlock new growth opportunities and strengthen their market position.
With access to financing and strategic guidance from a fractional CFO, our client could confidently plan for future growth. They now had the flexibility to continue scaling operations without cash flow constraints and a financial reporting system that provided clarity for investors, paving the way for potential future rounds of financing.
Does your business need access to capital for expansion?
Kala Financial connects businesses with trusted lenders and provides the strategic financial guidance needed for sustainable growth. Schedule a consultation with us today to explore financing options tailored to your industry.
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