Hey DF,

As many of you know..... We are Seacoast Business Funding, a division of Seacoast Bank. We offer flexible working capital solutions in the forms of factoring and asset based lines of credit. We are trusted working capital partners for companies in a variety of industries on a national level. We have the ability to finance companies doing as little as $2.5Mil in revenue a year to companies generating well in excess of $300Mil a year.

We are seeing a lot of instances where a company has a small bank line and is just flat out-running their bank. As most of you know, banks take a pretty conservative approach to lower middle market companies. When they are experiencing hyper growth or there is customer concentration, they tend to not be willing to increase their lines of credits to customers. That is the time when a business owner has to make some tough decisions. "If I stay with the bank line...will it stifle my growth or possibly hurt the business because I have to say no to customers." The other choice is seeking an alternative way to finance working capital that provides a lot of flexibility and liquidity.

Example: Last week I met with the CEO of a Company based in the North East. He lives and works in Florida. The Company is a few years old and beefed up their sales capabilities over the last 12 months as well as entered some new markets. Revenues for the last several years have been steady Eddie at $5Mil/Year. Their $750K LOC with their bank was good enough for their needs. Now that sales have kicked in with their new initiatives, the Company's working capital is stretched. They are billing in excess of $2Mil/month and will likely finish the year with $15Mil in sales. For the last 3 months they have been begging their bank to increase their LOC.....likely not going to happen or not going to be enough to keep pace.

AR as of last week was sitting at $2.5Mil and growing. A $750K LOC is not helping them with their day to day needs and/or payroll. The LOC of $750K is priced at Prime + 2.5% or 8%. Without an increase they will never be able to grow and may wind up pissing off some new customers.

I am in the process of issuing a factoring term sheet. $4Mil facility, 93% advance rate on AR, and I am a tick below 11% all in. This is a no-brainer for the owners. For a slight pricing increase they get a ton more availability and flexibility that allows them to continue to grow. When the hyper growth evens out a little, we will flip them into a LOC or ABL facility.

3% increase is the difference between $5Mil in revenue and $12Mil in revenue.

In a deposit thirsty and interest rate rising environment, banks are not going to be willing to increase lines as needed because the risk is not worth the reward. There is a lot of this going around.......