Equipment Financing for an Equipment Re-seller Business

searcher profile

May 06, 2024

by a searcher from Stanford University - Graduate School of Business in New York, NY, USA

Hi all, I am under LOI with a company that does Energy Equipment Inspections, Repairs, Refurbishments etc (think turbines, generators). There is a huge potential for actually buying old equipment on their own account and pre-sell at crazy margins.

To give you an example, there are currently GE turbines in the market at $5m each. They can buy them, refurbish them (another $1m) and deliver at $12,5m each in 3 months to a client who'd pay $3m today with a contract/LoC for that delivery. $3m shortfall needs to be financed. This single deal would immediately add roughly $10m in EBITDA to their current $6m. In essence the debt would be triple-guaranteed by the client's LoC, equipment itself and company cashflow.

I am looking for bank debt for this particular opportunity, and for a line of credit for the ramped up line of business.

Any pointers, advice, etc. much welcome.

1
6
98
Replies
6
commentor profile
Reply by a professional
in Crystal Bay, NV, USA
You can consider getting a warehousing line of credit from a bank secured by the UCC filings and Term contracts you provide your equipment buyers. ZimpleMoney.com loan managment platform works in this application very well and becomes your banks system of record to review your long term receivables.
commentor profile
Reply by a searcher
from Massachusetts Institute of Technology in Colorado Springs, CO, USA
In general, I have a good relationship with my community/regional bank, and they were flexible on providing debt financing based on a solid business plan. They were much easier to deal with than a large national bank. Get to know your local business banker and see if she can help.
commentor profile
+4 more replies.
Join the discussion