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Financing Challenge:
healthcare-3mm-lineA $10 million health care staffing company had problems with the Factor that was financing the Company. The Company was getting frustrated with the Factor and the Factor was getting equally frustrated with the Company. The Company's financial position had improved and the Factor wanted to transfer the Company to its Asset Based Lending Group which would have been less expensive for the Company. However, the Company believed that its improved balance sheet qualified for even lower costs. The financial institution also wanted to charge the Company a large annual fee for taking on the cash management relationship. The Company did not have this expense with its current cash management relationship. The Company was introduced to Asset Enhancement Solutions, LLC for assistance in finding a new lender by one of its Trusted Advisors.

Financing Solution:
Asset Enhancement Solutions, LLC ("AES") noted that although the Company's performance and financial position had improved, the Company was still quite leveraged with a Debt to Equity Ratio of 5.3 to 1. The Company's principals preferred to take significant distributions rather than leave the profits in the Company. Finding a lender amenable to this situation would be difficult.

AES was successful in arranging a $3,000,000 Line of Credit with a commercial bank at the rate of Prime plus .25%. This bank provided an advance rate on accounts receivable of 90%. The total cost of this new facility was 28% less expensive than that which had been offered to the Company by its previous financial institution.

Neil Seiden, 516-767-0100

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