As banks decline working capital credit lines to produce distributors, 1st Commercial Credit is funding in 5 to 7 working days.
Austin, TX (PRWEB) May 21, 2012
As produce distributors seek for working capital at banks with little results, 1st Commercial Credit is funding produce companies in 5 to 7 working days. Raul Esqueda, President of 1st Commercial Credit says “ The produce industry relies on The Blue Book Rating, your business is either in or out. Our clients are sometimes too new to be rated and therefore have to pay for the produce prior to shipping. Some of their business is COD, and some is sold on credit terms of net 21 to 30 days causing a major cash flow gap”. Although banks will consider lending to produce companies, they must go through all the criteria banks are regulated under. Many produce distributors are re-distributors making their margins super thin to work with, and sometimes operate at a loss. Agriculture related industries sometimes involves PACA related claims so this makes receivable financing risky. Very few factoring companies and banks will consider the receivable asset as collateral when there is possible PACA claims conflict or litigation.
The receivable credit line is based on the credit worthiness of the customers/account debtors, not the applicant/clients. Funding parameters must meet $100,000 a month minimum and have a “Absolute Standards” quality control. The applicant must maintain its payables current, and have good bookkeeping practices in place. Applicant must have at least $80,000 in outstanding accounts receivable to qualify, produce distributors with zero receivable balances will not qualify. Currently this financing program is only available in the USA.
For more information please visit Financing Produce Distributors.