Second Avenue provides $8 million revolver to IT'SUGAR
The candy retailer is adding wholesale distribution alongside stores and e-commerce. Brokers need to separate the cash cycle of each channel when sizing working capital.
Second Avenue Capital Partners provided an $8 million senior secured revolving credit facility to IT'SUGAR, the specialty candy retailer with more than 100 locations in the United States and Canada. The lender's October 6 announcement said the facility will support working capital and growth. IT'SUGAR has also recently launched a wholesale business alongside its stores and e-commerce operation. That new channel changes the questions a broker should ask about working capital. A retailer selling to other businesses may have to carry customer invoices after merchandise leaves its warehouse. Store sales and wholesale sales can produce different collection schedules, even when they involve the same products. The financing file should show those schedules separately. The release does not disclose IT'SUGAR's wholesale payment terms, channel revenue mix or customer concentration. It also leaves out the revolver's pricing, maturity, advance rates and amount drawn. The $8 million figure describes the facility, not a verified cash balance. The announcement gives no basis for calculating how much the company can borrow today. Second Avenue is a Schottenstein affiliate that specializes in asset-based lending to retail and consumer-products companies. Its stated approach draws on retail operators and product merchants to assess assets. In the announcement, portfolio head Andrew Prunier said the financing gives IT'SUGAR more flexibility to invest in inventory and pursue strategic initiatives. Neither the lender's description nor the facility size establishes the retailer's margins or inventory performance. For a broker preparing a similar retailer's application, the first useful breakdown is sales and collections by channel. Store receipts should reconcile to processor settlements and bank deposits, with refunds and fees identified. Online sales may involve a gap between order, shipment and settlement. Wholesale customers may pay under invoice terms. Combining these flows into one monthly deposit total can hide which part of the business needs financing and for how long. Inventory records need the same channel detail. A unit moved from a warehouse to a company-owned store remains inventory until it sells. A shipment to an outside wholesale customer may create a receivable, depending on the sale terms. The file should reconcile those movements so the same goods do not remain in an inventory report after an invoice has replaced them. This is a general control recommendation, not a reported problem at IT'SUGAR. Branded merchandise adds another diligence question. A lender assessing inventory should establish what the borrower owns and whether any license or distribution agreement limits resale. An appraisal also needs the product's condition and sales history. A popular display item can still sell slowly at a particular location. Neither a retail price nor a recognizable brand alone establishes what a lender could recover from unsold stock. For wholesale receivables, a broker should request customer-level aging and the terms governing returns or deductions. An order demonstrates demand; delivery and acceptance records help support the resulting invoice. If a customer disputes part of a shipment, the collection forecast should reflect that dispute rather than assume the full invoice will arrive on its original due date. These are diligence questions for comparable businesses, not disclosed conditions of Second Avenue's loan. The release does not identify which assets qualify for borrowing or how reserves are calculated. Any assessment of actual availability would require the agreement and a dated collateral report. The wholesale launch date and its contribution to sales are also undisclosed. Opinion Size the request by channel Brokers should show how a wholesale order will be funded through collection before using it to support a larger financing request. Separate the expected payment date from the shipment date, and identify the cash needed between them. That gives a funder a specific exposure to assess instead of a blended sales forecast. Read more on business lending at plutusai.net .