Growing Vermont Tubbs seeks $80K city loan
By Jeff Linville -- Furniture Today, December 16, 2007
Brandon, Vt. — Vermont Tubbs is seeking $80,000 from a municipal loan fund here to help its cash flow as the business grows.
The solid-wood bedroom producer was on the verge of closing when a newly formed investment group bought it in December 2003.
Today, the owners say sales have grown at an annual rate of 5% to 7% the past three years, to an estimated $6.5 million shipped in 2007.
"We started with 58 employees. We're now up to 87, and we're looking to hire seven more," said co-owner Jon McNeill. "It's not much in the greater scheme of things, but in this town we're the largest employer by far."
In addition to the $80,000 loan, the company is seeking to refinance $750,000 through the Vermont Community Development Program. When buying the company, the investment group took out a $750,000 loan from the Vermont Economic Development Authority.
After the acquisition, the company was losing money and could not pay the debt back immediately. This year, Vermont Tubbs is slightly in the black, and is on pace to achieve better results in 2008.
Some of the loan will be repaid with monies received from antidumping duties collected by the federal government on imported Chinese wood bedroom furniture. In the recent duties distribution, Vermont Tubbs received more than $365,000.
The financial moves will provide the manufacturer, which counts Bloomingdale's among its clients, with working capital to help it fill incoming orders.
When a company receives orders, it must buy lumber, pay suppliers and pay workers, while retailers could take 60 or 120 days to pay for the furniture. For a small, growing company, this can cause a temporary cash flow problem, but McNeill believes this is a side effect of improving business.
He said it certainly isn't a sign of trouble for the company. He said this is the first time in his four years of ownership that the factory will be open during the holiday season, closing only on Christmas Day, because it has orders to fill. McNeill said the company also worked through the July 4th week.
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Vermont Tubbs seeks city loan
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