Platform
Bank repriced different amounts of collateral to match bank exposure with borrower requirements.
Asset-lite business
Supporting Growth for an Asset-Lite Renewable Energy Company
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- Bank
- Texas based community bank
- Borrower
- Renewable energy company
- Line of credit
- $5,000,000
- Collateral coverage
- $3,000,000
Issued by UMB Bank
Situation overview
- Company provides sales, marketing and logistics for byproducts of the wood pulping industry
- Recapitalized in 2023 by a sponsor resulting in a new management team being brought in
- Deal referred to the bank by CollateralEdge™
- Borrower seeking working capital line of credit to support tremendous growth post recapitalization
- Collateral support needed on $5M line of credit
- PE / Sponsor backed
Underwriting concerns
- 01
Uneven financial history
- 02
Asset-lite business
- 03
New relationship for the bank
Strong performance post-recap did not provide a lengthy track record for underwriting. Currently an asset-lite business dependent upon working capital. New relationship to the bank.
Solution
Collateral
Letter of credit issued by UMB Bank to our bank client at deal close. 60% coverage for 90 days, renewable for 7 quarters.
Bank Control
Coverage paid up front providing security for bank. Bank can drop coverage when company performs.
Benefits
The CollateralEdge value proposition is designed to align incentives with our bank customer to win a commercial loan.
The Bank secured a new growing commercial customer that was not in their existing pipeline.
CollateralEdge enabled our bank customer to provide the size of line and close at a pace that met the borrower’s business needs.
Executing this commercial loan enabled the bank to secure the deposits as well as opportunities for future fee income.