Asset-based lending provides manufacturers and distributors with a flexible source of working capital secured by the value of their accounts receivable, inventory, or other business assets. For food manufacturers and distributors — whose businesses often involve significant receivables, seasonal inventory swings, and tight operating margins — a well-structured credit facility can be the difference between constrained operations and the liquidity needed to grow. Securing a credit facility of this type requires experienced counsel who understands both the commercial lending mechanics and the specific characteristics of food manufacturing businesses that lenders evaluate when underwriting this type of credit.
Mandelbaum Barrett PC attorney Richard Simon, Esq. secured a $9 million credit facility for a New York food manufacturer, a transaction highlighted by ABF Journal. Simon practices in the firm’s corporate law practice group, advising businesses and lenders on commercial finance transactions, including asset-based lending facilities, revolving credit agreements, and related working capital financing arrangements. Coverage of this transaction in ABF Journal reflects the significance of the deal within the asset-based finance community and the quality of the legal work that brought it to a successful closing.
Securing a Credit Facility for a Food Manufacturer
Asset-based credit facilities for food manufacturers require due diligence focused on the specific assets that will serve as collateral. Accounts receivable from food distributors, grocery chains, and other buyers must be evaluated for eligibility under the lender’s advance rate formula, and inventory — which may include raw materials, work in process, and finished goods with varying shelf lives and marketability — must be appraised and categorized appropriately. The loan documents must clearly define the borrowing base, the conditions for advances, and the operational covenants that will govern the borrower’s management of the collateral during the life of the facility.
For a food manufacturer, additional considerations include any product liability insurance requirements, food safety regulatory compliance (including FDA and USDA requirements as applicable), and any contractual restrictions in existing customer or supplier agreements that may affect the lender’s security interest in the receivables. Borrower’s counsel works to ensure that the credit agreement and security documentation accurately reflect the business’s operational realities while protecting the borrower’s flexibility to operate effectively under the facility’s terms.
According to the U.S. Small Business Administration, asset-based lending is an important financing tool for businesses with significant receivables or inventory, providing working capital that grows with the business’s asset base. Experienced commercial finance counsel helps borrowers evaluate their options, negotiate favorable terms, and close efficiently.
Contact Mandelbaum Barrett PC for Commercial Finance Guidance
If your business needs a credit facility, revolving line of credit, or other commercial financing in New York or New Jersey, the corporate law team at Mandelbaum Barrett PC can help.
Reach out through our contact page to speak with our team. We are here to help manufacturers and other businesses secure the financing they need to grow.
These stories are successful case results from our attorneys. Please note that results may vary depending on your particular facts and legal circumstances.