Yes, We Can Do That!
You know, we really like it when a plan comes together.
In the spring of 2011, one of BND’s correspondent bank customers contacted our Commercial Lending services area with this opportunity. An established North Dakota manufacturer wanted to take their business to the next level. That’s just the kind of talk we like, so BND’s loan officer rolled up her sleeves and dug in.
The company had been operating in a relatively small job shop in a rural community for 25+ years. Their product is well-known and respected in the construction, mining, and oil-field services industry. They just never made the leap from a job shop operation to a full scale manufacturing plant due to the challenges of finding capital and affordable production capacity to accommodate the move.
In 2010, a new partner joined the company. Encouraged in part by the explosion of activity in western ND, this partner brought fresh ideas, capital and contacts resulting in the identification of an existing manufacturing facility which would fit the company’s expansion plans.
With an assist from BND’s New Venture Capital Program and the North Dakota Development Fund, the balance sheet was structured to give the strength necessary to make the financial request “bankable” for both our correspondent bank partner and BND.
The originating lender and BND’s commercial staff worked to assemble a Commercial Participation Loan Program package of no less than six notes totaling nearly $6 million. The notes were used to fund building and equipment acquisition, as well as provide working capital financing to build a leasing line and carry the costs of accounts receivable and inventory.
Initially, the originating lender was concerned that the need for frequent advances and payments on the revolving lines of credit would be awkward and labor intensive. That concern proved to be basically non-existent as the bank was able to easily clear funds through their existing correspondent DDA account with BND. The hassle and expense of wiring funds back and forth was completely eliminated.
This month BND had the opportunity to review full year-end results for the company. The borrower’s plan has come together nicely. In fact, they need additional bank assistance to accommodate their growth. Their new location has 37 employees and their original rural ND site will undergo renovation to accommodate another product line better suited to that facility and its 16 employees.
BND is your “Yes, we can do that!” banking partner supporting economic development on behalf of the State of North Dakota.
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