Contracts Line of Credit
Contracts Line of Credit:
Given the ever increasing cradle-to-grave in the tooling purchasing payment cycle, many suppliers either can not access sufficient capital to bid on contracts and others can not access the capital for the entire cradle-to-grave period.
T&E Capital has taken a different approach to finance large "net never" contracts by using a Contract Line of Credit (CLOC) structure. This approach, largely borrowed and adapted from the real estate construction industry, allows for cradle-to-grave financing for tooling and automation manufacturers as well as purchasers.
The benefits of the Contracts Line of Credit approach include:
·Predictable debt capital.
· Patient debt capital, as repayment occurs from contract payment receipts.
· Possibility of higher advance rates during both the work-in-progress period
(WIP) and the accounts receivable period (A/R).
The target client for a CLOC will require a credit facility of $5.0 million or more.