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).

While we have referred the WIP period and A/R period in the above, we at T&E Capital prefer to look at the risk profile and advance rates as "pre-shipment" and "post-shipment" as these are the two distinct risk periods during the cradle-to-grave.

The target client for a CLOC will require a credit facility of $5.0 million or more.