The phone call came at 2 PM on a Tuesday. "We have $40 million in orders we can't fulfill," the CEO said. "Our biggest customer is threatening to walk. We need working capital, but the bank says we're maxed out."
This wasn't a startup problem. This was a $25 million medical equipment manufacturer that had grown too fast for their own good. They had the orders, the customers, the reputation—but they were trapped in a working capital cycle that was slowly strangling their growth.
What happened next wasn't about finding more money. It was about unlocking the money they already had through Asset-Based Lending (ABL)—a solution that freed up $3.2 million in working capital in 30 days and saved their biggest customer relationship.
The Working Capital Trap
Here's what most people don't understand about fast-growing manufacturers: success can kill you. Every new order requires raw materials, labor, and finished goods inventory. The bigger the order, the more cash you need upfront. But customers don't pay until delivery—sometimes 60-90 days later.
This company was doing everything right. Their products were in demand. Their quality was excellent. Their customer relationships were strong. But they were drowning in their own success.
Their traditional line of credit was maxed at $2 million. Their bank wanted more collateral, more guarantees, more everything. Meanwhile, they had $8 million in accounts receivable and $4 million in inventory sitting on their balance sheet—assets that could be working for them, but weren't.
Why Traditional Financing Failed Them
Banks love to lend money to companies that don't need it. When you're growing fast and need working capital, they want to see stability, predictability, and a track record of consistent profitability.
But fast-growing companies are inherently unstable. They're investing in capacity, hiring people, building inventory. Their cash flow is lumpy. Their balance sheet ratios look scary to traditional lenders.
This company had been profitable for years, but their growth was outpacing their ability to fund it. They needed a different kind of financing—one that looked at their assets, not just their income statement.
The ABL Solution
Asset-Based Lending (ABL) is different. Instead of looking at your income statement and asking "Can you pay us back?", it looks at your balance sheet and asks "What do you own that we can lend against?"
We helped them set up an ABL facility that advanced 85% against their accounts receivable and 50% against their inventory. Suddenly, that $8 million in receivables became $6.8 million in available credit. That $4 million in inventory became $2 million more.
Total available credit: $8.8 million. Their old line of credit: $2 million. Net new working capital: $6.8 million. All secured by assets they already owned.
The 30-Day Implementation
Setting up ABL isn't like getting a traditional loan. There's no 90-day approval process, no committee meetings, no endless documentation requests. It's asset-based, so it's faster.
We had them approved in 15 days. The lender did their due diligence on the receivables and inventory, set up the borrowing base, and funded the first advance within 30 days of application.
The first advance was $3.2 million. They used it to buy raw materials for their biggest customer's order. That customer stayed. The relationship was saved. The company could breathe again.
The Results Six Months Later
By month six, they had fulfilled every order on time. Their biggest customer signed a three-year contract. They hired 15 new employees. They invested in new equipment. They were growing again.
The ABL facility gave them the flexibility to take on bigger orders, longer payment terms, and more complex projects. They weren't just surviving—they were thriving.
Most importantly, they had learned that growth doesn't have to be limited by working capital. When you have the right financing structure, your assets can work for you instead of against you.
What This Teaches Us About Growth Financing
The biggest mistake growing companies make is trying to fit their financing needs into traditional banking products. When you're growing fast, you need financing that grows with you.
ABL isn't for everyone. It's more expensive than traditional financing. It requires more reporting. It's secured by your assets. But for companies with strong receivables and inventory, it can be the difference between growing and dying.
This company learned that lesson the hard way. But they also learned that with the right financing partner and the right structure, even the most challenging growth situations can be solved.