Flatbay Capital is excited to announce the successful funding of a $2.5 million Owner-Occupied Commercial Real Estate Bridge Loan for a family-owned fabricator and supplier of HVAC ductwork.
This company primarily serves the commercial market, specializing in partnerships with general contractors who are involved in multifamily residential developments and school districts. Their commitment to delivering customized HVAC ducting solutions tailored to each project has set them apart in the industry. Operating in the Texas market, they have remained exceptionally busy, primarily due to the local climate's demand for air conditioning systems.
The COVID-19 pandemic caused significant delays in the company's large-scale projects, resulting in increased costs of goods sold for metal, which could not be promptly passed on to clients. Furthermore, payroll obligations were not reduced at a fast enough pace to match the project delays. However, over the past year, the company has implemented several efficiencies and improvements. These include right-sizing their SG&A overhead, successfully renegotiating material costs, and introducing contracts with material escalation cost language to mitigate the risk of raw material cost fluctuations.
A Cool Solution!
These operational enhancements ensure that each project bid will now yield improved profitability, doubling the gross profit margin and reducing losses. The company is projected to return to quarterly profitability in Q2 2024. Flatbay Capital believes that this opportunity will assist this historically profitable business in regaining its financial stability within the next 24-36 months. The funds from this bridge loan were used to pay off the current bank loan, with the remaining balance available for general working capital needs.
Managing Partner Elliot Smith states, “When we were referred this opportunity from a CPA firm we immediately knew that we could help. Our flexible CRE loan solution will give them the capital and time they need in order to grow their business once again.”
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