Special Situations

The Company: Southeast based consumer credit and identity solutions software-as-a-service provider, majority owned by founder & CEO Ed Margolin. Visit Fraud Protection Network’s website to learn more.

The Financing Situation: The Company had previously financed its growth with a combination of equity and convertible notes.  With new product rollouts and strategic partnerships in 2020 creating accelerated growth, the Company was seeking non-dilutive capital to finance its working capital needs and extinguish convertible notes in order to preserve equity.

The Solution: SG was able to quickly get comfortable with the transaction due to the rapidly growing monthly recurring revenue, strong industry retention rates, and overall financial health of the company.  SG structured a covenant-lite $2.5MM loan with a tailored repayment schedule around cash flow that bought out the convertible notes to avoid further dilution and provided additional liquidity for the Company to continue its growth trajectory without equity support.

This transaction demonstrates SG’s ability to underwrite SaaS / recurring revenue loans. While many of you know us as a cash flow based lender, we now provide non-dilutive SaaS / recurring revenue loans requiring creativity, flexibility, and speed to close. Click HERE for a link to our SaaS / recurring revenue one pager to learn more.

The Company: Venture-backed SaaS platform for digital publishing.  Revenue: $6MM | Equity Raised: $30MM.

The Financing Situation: The Company’s existing debt facility was maturing and the incumbent lender was unwilling to extend due to lender fatigue and other circumstances. SG was brought in alongside an equity contribution to refinance the debt and provide additional working capital.

The Solution: SG was able to quickly get comfortable with the business due to the contracted recurring revenue, continued equity support, and opening liquidity. SG provided a $1.5MM non-formula, structured senior secured loan. The incumbent lender successfully exited the credit as desired and the Company received additional working capital. SG closed this transaction within two weeks.

The Company:

Venture-backed, cloud-based software platform primarily targeting outbound sales organizations.

The Financing Situation:

The Company experienced significant year-over-year growth but the Company’s existing credit facility was maturing and the incumbent lender did not want to extend its maturity date. Additionally, the Company was seeking non-dilutive growth capital to execute on its sales pipeline and increase ARR to improve its valuation prior to raising additional equity.

 The Solution:

SGCP was able to quickly get comfortable given the rapid growth, contracted recurring revenue, enterprise customer base and strong management team to provide a $6.5 million senior secured credit facility that was bifurcated into a $3.5 million interest-only loan and $3 million term loan. SGCP provided this structure to close the deal quickly and to bridge the Company to a new senior lender. The new senior lender will refinance SGCP’s $3.5 million interest-only loan and SGCP will then subordinate its $3.0 million term loan under its typical second lien structure.

This transaction highlights SGCP’s ability to write larger checks as a result of its recent capital raise as well as our ability to provide a one-stop solution.

The Company: Provider of IT managed services and cloud collaboration solutions.  The Company’s management team owns corporate real estate held in a LLC outside of the Company.

The Financing Situation: The Company was in need of upfront working capital for new contracts, but did not have availability on its bank ABL.  The bank ABL had recently closed its credit facility and was not able to provide additional financing until there was a six month track record of positive financial performance.  Management was intent on executing the new contracts and was willing to provide a second deed of trust on its corporate real estate outside of the business as security for a loan.

The Solution: SGCP quickly underwrote the Company and was able to get comfortable with projection based debt service since there was sufficient equity in the corporate real estate as security.  SGCP provided a $2 million second lien cash flow loan to the Company secured by a second deed of trust on the corporate real estate which enabled the Company to execute on its new contracts and grow the business.

The Company: Industrial recycling company that sells processed and unprocessed materials to domestic and international mills, foundries, and other material processors. Ownership: Family-owned. Financial Profile: $40 million of revenue.

The Financing Situation: Management was exploring a sale of the Company and needed additional working capital beyond the availability on their asset-based credit facility. SG was approached by the Company’s bank ABL to provide a second lien working capital loan to enable the Company to run a sale process without any potential for liquidity shortfalls.

The Solution: SG Credit Partners was able to quickly get comfortable with the Company’s financial profile and provided a $1.5 million loan with interest-only payments to give the Company maximum liquidity throughout the sale process. The loan funded within three weeks of a signed term sheet, alleviating liquidity constraints and allowing management to focus on selling the Company.

SG Credit Partners’ second lien loans can help senior lenders close deals (onboard new clients), offer a liquidity solution when unable to lend up (retain existing clients), and/or solve out-of-formula / technical default issues.

The Company:
Non-VC/sponsor backed cloud-based video storage provider for smart home devices.
Revenue: $10mm+ run rate | EBITDA: Break-even

The Financing Situation:
The Company was searching for a non-dilutive capital solution to help finance continued growth – customer acquisition costs and new data center facility capex.  Bank financing was not an option given a combination of the Company’s non-institutional ownership and current financial performance.  ABL financing was not an option given the Company’s direct-to-consumer model.

The Solution:
SGCP was able to get comfortable with the Company’s lack of historical profitability given the growing monthly recurring revenue, data center assets, and dedicated entrepreneur. SGCP provided a non-dilutive $2.0 million senior secured loan that will enable the Company to continue rapid growth while preserving existing shareholder equity.

The Company:
Cloud-based media monitoring and intelligence platform with contracted, recurring revenue.
Revenue: $15mm | EBITDA: $1.5mm | Equity Raised: $10mm

The Financing Situation:
The Company had a line of credit as well as a term loan in place with a Bank. Due to lender fatigue and technical default (financial covenant compliance) the Bank wanted to exit the credit.

The Solution:
Super G was able to get comfortable with the business due to the recurring revenue, continued equity support, and strong management team. Super G provided a $2.0 million bifurcated credit facility to retire the Bank’s credit facility as well as provide additional working capital. Super G’s $2.0 million bifurcated credit facility consisted of a $750k interest-only loan and a $1.25 million amortizing term loan. Super G provided this structure to bridge the Company to a new senior lender. The new senior lender will refinance Super G’s $750k interest-only loan and Super G will then subordinate its $1.25 million term loan under its typical second lien structure.

The Company:
Privately owned wholesaler of licensed toys, collectibles, and housewares.
Revenue: $22mm | EBITDA: $2.8mm

The Financing Situation:
The Company needed additional working capital to purchase inventory in advance of the holiday busy season. The Company has a flexible asset-based credit facility from FSW Funding (“FSW”), however, given the seasonality of revenue, the Company’s current accounts receivable balance did not provide sufficient availability to purchase the inventory needed for its busy season.

The Solution:
Super G was able to quickly get comfortable due to historical financial performance, strong management team, and funding into the Company’s busy season. Super G provided a non-dilutive $1.0mm second lien loan behind FSW with repayment structured around seasonal cash flow, which enabled the Company to purchase inventory to meet seasonal demand. The transaction closed in less than two weeks.

For more information on FSW Funding, please contact:
Adam Keck
Senior Vice President
akeck@fswfunding.com
480-440-2496
www.fswfunding.com

The Company:
Venture-backed SaaS provider for content management and digital publishing.
Revenue: $8mm | Equity Raised: $22mm

The Financing Situation:
The Company was placed in the Bank’s special assets division due to a covenant violation. Although the Company continued to perform, the Bank wanted to exit the credit. Super G was brought in to offboard the client and provide additional working capital.

The Solution:
Super G was able to quickly get comfortable with the business due to the contracted recurring revenue and equity support. Super G provided a $1.5mm highly structured, nonformula-based, senior secured loan. The Bank successfully offboarded the client as desired and the Company received additional working capital.

The Company:
Private equity backed, outsourced pharmaceutical service provider conducting clinical research.
TTM Revenue: $17mm |TTM EBITDA: $1mm

The Financing Situation:
The Company had a cash flow based term loan with its bank and was in technical default.  Given the combination of lender fatigue, lumpy sales & cash collections due to the timing of contracts, and high monthly payments on the term loan, the Company was seeking immediate relief.  An asset based lender was not a solution due to timing and the term loan take-out amount would not conform to a borrowing base.

The Solution:
Super G provided a $2.0 million senior secured, interest-only bridge loan for a full take-out of the bank and working capital to support the Company’s immediate financing needs – a flexible structure which will allow the Company to operate its business with sufficient liquidity and buy time to run a full process for a new bank relationship.  Super G was able to get comfortable with the sales lumpiness & YTD financial performance given the Company’s strong track record, accounts receivable collateral, enterprise value, and experienced management team.  Super G was able to close quickly (within 2 weeks) which benefited both the bank (removed loan from special assets) and the Company (covenant light loan, working capital cushion, and debt service flexibility).