Location: Kelowna (head office), with locations across Western Canada
Industry: Sports nutrition and supplement retailer
Annual revenue: $10,000,000+
Loan products: Cash flow term loans, operating line, and corporate credit cards
Total credit facilities: $3,300,000
Lender: Chartered bank
Primary goals achieved: Additional leverage, Greater flexibility
The owner of multiple franchises in the nutrition and supplement industry was referred to Lakepoint by a common connection. The owner had eight stores, with plans to open three new stores in the next 12 months. Despite having experienced management and generating predictable, steady revenues with enviable profit margins, their incumbent bank was hesitant to provide the support the owner needed to continue growing his group of companies. That lender, who was a chartered bank, had the following rationale for not supporting the owner’s needs:
Most of the financing was only secured by cash flows, not tangible assets;
They (like many lenders) preferred to make decisions on credit for new stores on a case-by-case basis, rather than pre-approving multiple stores at once; and
The owner wanted to increase their corporate credit card limit to $750,000+, which was well outside most chartered bank’s parameters for companies with their size of revenue[1]
When the intro was made to Lakepoint, the owner was already in conversations with another lender. That lender was evaluating the owner’s financing needs but were also having challenges wrapping their head around it, for many of the same reasons.
After a couple strategy sessions that allowed Lakepoint to understand the business, the owner engaged Lakepoint to secure the financing it was seeking. Lakepoint put a comprehensive financing request together – which included preparing consolidated financial statements for multiple entities – and brought that request in front of it’s key chartered bank partners.
The process was highly successful, producing multiple offers that achieved the goal of securing pre-approved financing to open the new stores, along with credit card limits ranging from $700,000 to $1,000,000. However, one of the offers went even further and had no restrictions on the dividends that the owner could withdraw from the company, whereas the other two offers did. This element proved to be the deciding factor for the owner, and the deal closed smoothly with this lender not long after the offer was accepted.