CASE STUDY
The Client:
A medical device manufacturer producing specialized equipment for healthcare providers, the company operates in the highly regulated medical technology sector where FDA compliance, quality certifications, and sophisticated manufacturing capabilities determine market success. With established customer relationships and proven manufacturing expertise, the business had identified a significant growth opportunity requiring investment in a specialized production line that would expand capacity and enable new product development. As a repeat First National Capital customer, the manufacturer had demonstrated operational competence and financial performance that warranted continued investment, but the specific requirements of this transaction would test the limits of traditional equipment financing structures and the company’s existing credit agreements with its senior lender.
The Challenge:
The company needed 18 months of progress payments to fund a specialized manufacturing line throughout its lengthy build cycle—a duration that exceeded the 12-month maximum most equipment lenders would accommodate, immediately disqualifying the majority of potential financing sources. The transaction required completion within a tight 45-day window to meet vendor deadlines and production schedules, leaving no time for extended negotiations or multiple lender discussions. Most critically, the company’s existing credit agreement with its senior lender included covenants that would be breached if the manufacturer paid for equipment upfront and sought reimbursement—a common sale-leaseback structure that was explicitly prohibited under the credit facility terms. The highly specialized nature of the manufacturing equipment added additional complexity, as traditional lenders struggled to assess collateral value and resale potential for custom medical device production machinery. Without a financing partner who could accommodate 18 months of progress payments, execute within 45 days, structure the transaction to avoid covenant violations, and underwrite specialized medical manufacturing equipment, the company would miss the vendor deadline and forfeit a critical capacity expansion opportunity.
Solution:
First National Capital recognized that this repeat customer required extraordinary execution speed and creative structuring to overcome multiple simultaneous constraints that would have stopped traditional lenders. FNC approved $24 million in financing for the specialized manufacturing line, leveraging the established relationship and confidence in the manufacturer’s operational capabilities to move decisively. Understanding the 45-day deadline was inflexible, First National acted swiftly and dual-processed critical workstreams simultaneously rather than sequentially—accelerating documentation, due diligence, and credit approval processes to compress what typically requires months into weeks. Most importantly, FNC structured the transaction to provide progress payments directly to the equipment vendor throughout the 18-month build cycle while ensuring the financing mechanics complied with the company’s existing credit agreement and avoided any covenant breaches that could have triggered technical default. By accommodating the extended 18-month progress payment schedule that other lenders refused, executing within the compressed 45-day window, and navigating the covenant constraints that made standard sale-leaseback structures impossible, First National enabled the medical device manufacturer to complete a critical capacity expansion that would support continued growth in the competitive healthcare technology market without disrupting its senior lending relationship or operational timeline.
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