$2.2 Million Purchase Order and Accounts Receivable Facility for Federal Government Supplier
When a government shutdown triggered default of an SBA loan and stopped funding for deliveries to the FBI of a patented remote surveillance camera, DBR worked with Diversified Capital Resources (DCR, our sister lending company), the product manufacturer, the SBA and the lending bank to quickly provide $2.2 million in PO and AR funding.
Income stopped and payments could no longer be made on the SBA loan when funding for a two year, $5 million contract with the US Department of Justice for deliveries of the $9,000 each surveillance devices to the FBI and Homeland Security was delayed for a period of nine months. Faced with pending liquidation of all company assets by the lending bank, the manufacturer went looking for alternative sources of funding.
Working closely with the manufacturer and the lending Bank, the principals of DCR were able to put agreements in place with the client, the lending bank and the SBA so the POs and accounts receivable could be used as security for the $2 million in funding required to fill the FBI order.
All 400 units of the surveillance camera were delivered to the FBI within the terms of the contract and payments to the lending bank were restored.
The top secret nature of the work prevented use of traditional PO and invoice assignment arrangements. Through the agreements that DCR put in place with all parties, the purchase orders and the receivables could be used as security for the $2.0 million in funding needed to fill the FBI order. Once product was delivered, payments to the SBA loan were resumed.
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