Illustrative structure — Unsecured
Buying a season ahead of the revenue
$450,000
Wholesale and distribution
This is an illustrative example, not a completed transaction. It is prepared to show how a unsecured facility is put together. It does not describe any specific borrower and nothing in it is an offer or a commitment to lend.
The situation
A regional distributor takes the bulk of its orders in a ten-week window and has to buy the goods three months before any of it is invoiced. The bank line is sized against last year and does not move until the annual review.
The owner does not want a lien filed across the business for a facility that will be repaid inside a year, and the inventory itself is turning too quickly to serve as useful collateral.
The structure
An unsecured facility written against the operating business, with a personal guarantee and no collateral pledged.
Payments sized to the trough months rather than the peak, so the obligation does not tighten exactly when receipts are thinnest.
Term set to land shortly after the season converts to cash, rather than running on past the point the capital is useful.
The outcome
The buy is placed on time and at volume pricing. The facility amortises out of the season it funded.
No lien is filed, leaving the bank line and the senior position untouched for the annual review.
At a glance
- Product
- Unsecured
- Security
- No collateral pledged; personal guarantee
- Use of proceeds
- Inventory purchase
- Repayment
- Amortising, sized to seasonal trough