Wiseway’s Cain Providing Alternate Source of Financing via Alliance Business Lending

Now that the recession is over and a sluggish recovery is underway in most markets, many electrical distributors need to reinvest in their businesses so they can service the slowly increasing demand for their products. Unfortunately, if they need cash or expanded lines of credit from banks to do this it’s still not always readily available.

Next month’s issue of Electrical Wholesaling magazine will offer additional details about how John Cain, president of Wiseway Supply, the Florence, Ky.-based distributor of electrical and plumbing supplies, provides a solution for this challenge. Cain saw how hard it was for small businesses to get credit during the recession, and he decided to launch a business last year with several business associates in the banking business to provide distributors and other small businesses with a source of financing through Alliance Business Lending, Cincinnati, an asset-based lending company.

Cain says that while it’s a bit easier to get bank financing these days, many distributors still need additional financing options. Alliance Business Lending focuses on providing secured, revolving lines of credit between $750,000 to $3 million to companies with sales in the range of $5 million to $25 million. These customers use accounts receivable, inventory and machinery or equipment as collateral to back the loan.

“One thing that makes commercial finance companies more important these days is that as a business starts to grow, you need more working capital,” he says. “You need to replace that inventory and you may not be sitting on the cash to do that.

“Anybody that has accounts receivable and inventory is a candidate for asset-based lending. Of course, for distributor that’s their two biggest assets. The biggest issue now is not that people can’t get any money from banks, it more often than not they can’t get enough. We have run across distributors in different industries that are getting by, but are passing on discounts or quantity buys because they don’t have the working capital. We met a distributor who was passing on 5% discounts. In our world that can be the difference between profitability and not being profitable. We were able to help him.”

The company first worked with distributors  in Ohio, Indiana, Kentucky and West Virginia, but is now expanding into other regions and lines of trade, including flooring, windows and other construction materials.