Solution Spotlight

Case Study: The Power of Accounts Receivable Financing

Learn how Marquette Transportation Finance can help your business grow.

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Marquette Transportation Finance’s (MTF's) experience and knowledge have helped several motor carriers receive the financing they need to grow. Using alternative lending to leverage accounts receivables (A/R) allows companies to expand and add services—even when traditional bank financing is not an option. 

Copyright © 2016 UMB Financial Corporation

CHALLENGE: Start-up trucking company meets obstacles when searching for financing. 
 
Finding Financing 

The owner reviewed lender partners to help finance the new company, but he was unable to secure funding from the traditional banks he approached, specifically due to the risks related with a start-up company. To qualify, the banks required at least six months of proven operating success, despite his demonstrated achievements at his previous company. Not to mention, most banks wanted additional security on the financing and required strict operating covenants. In addition to the challenges in securing financing, the owner also wanted a lender who understood the trucking industry and his business model, which was similarly hard to come by with a traditional bank. 

 

About Marquette Transportation Finance

Marquette Transportation Finance,  located in Bloomington, Minn., is a subsidiary of UMB Bank, n.a. and is a leading provider of accounts receivable financing solutions for the trucking industry, serving companies with annual revenue from $2 million to $400 million. Marquette assists trucking companies in meeting their working capital needs to drive growth, fund acquisitions, improve liquidity and fund restructures. MTF continuously works to implement industry best practices and remains up-to-date through its membership to ATA, TCA and state trucking associations in its regions. MTF is small enough to be nimble by controlling how it manages and offers its services, while also providing strength through its parent company, UMB Financial Corporation.

SOLUTION: With its knowledge of the trucking industry, MTF was able to quickly review the business plan and provide the owner with the financing to launch. 
 
Connecting with MTF

The business owner recalled previous connections with MTF and reached out to review options. Because MTF works solely with the trucking industry, the team was aware of his former business and its past success, in addition to being familiar with the model of the new business he was creating. As an industry specialist, MTF understood the customizations the entrepreneur needed to launch his venture.

After a conversation about financing, MTF extended an Advance Plus line of credit to the owner for $500 thousand, with no restrictive operating covenants. It only took 10 days from the owner’s acceptance of the MTF financing program for the funding to be disbursed, enabling the business to launch a few months after the sale of his previous company. In particular, MTF funds allowed the owner to invest in both technology and talent to build the initial business infrastructure.

 
CHALLENGE: The new company required additional working capital to leverage an opportunity for rapid growth.

 
Opportunities for Growth
With the help of MTF’s additional services, specifically collections and reporting, and his previous business connections, the owner’s newly launched company was able to exceed its goals in its first months of operation. The company’s growth and revenue outpaced early estimates, and the owner realized he had an opportunity to expand—even as a fledgling company. Once again, he consulted with MTF about financing options. 
 
 
SOLUTION: Quick access to funds through working capital helped this start-up grow and position itself for long-term success.
 
Nimble and Strong 

Seeing the potential of this new business and the expertise of its owner, MTF increased the company’s line of credit to $1 million. With the improved cash flow, the business was able to pay carriers and operators in a timely manner, which is critical in the transportation industry, in addition to enhancing operations through the purchase of a warehouse and additional trucks and trailers.

MTF’s quick reaction time and the increased fund availability so soon after launch are not common with traditional banks, and would have most likely taken several weeks or months to accommodate—if at all. But MTF understood carrier growth and how it’s achieved in the trucking industry, and provided the tools and cash flow necessary to fund that growth.  

With MTF’s working capital financing, the owner successfully launched a new carrier business is on a path for continued growth. 

 
The Bridge to Success 
Transportation is an industry with unique challenges, from higher upfront costs for fuel and payroll to longer payment timelines. Partnering with a lender that understands those challenges and provides custom solutions is critical for companies looking to grow. MTF is uniquely positioned to meet the financing needs of carriers by offering the strength of a bank with a size nimble enough to quickly process working capital programs.  Alternative lending can help companies bridge the financing gap left by traditional banks, including funding rapid growth and new venture.

Company Profile

In 2015, the owner of a large trucking company sold his trucking business—after growing it from two trucks at inception to 900 trucks and more than $180 million in annual sales. Shortly following the sale, several long-term customers approached the owner inquiring if he planned to open a new business. After consideration, plans begun for a start-up business that would include both a truckload carrier and a brokerage arm. 

DiAne Reed is the senior vice president and national sales manager for Marquette Transportation Finance. She has more than 35 years of experience in the transportation industry and is active in the industry as a member of the American Trucking Associations’ Women in Trucking committee, the Truckload Carrier Association’s Communications and Branding committee, and as a member of the North Carolina Trucking Association, International Factoring Association and Commercial Finance Association.

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