Lines of credit offer flexible financing: making it possible to keep up with demand.

• Author: Barbour, Tracy
• Position: FINANCIAL SERVICES - All Seasons Argo and Equipment

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As a full-service retail dealer of amphibious all-terrain vehicles, All Seasons Argo and Equipment sells what some people consider to be the Cadillac of ATVs. Argos, as the six-passenger rigs are called, can carry about 1,200 pounds and tow 1,800 pounds. They can travel across almost anything--dry land, water, swamps, and thick mud. This makes them a vehicle of choice for many hunters, anglers, and outdoor enthusiasts.

Anchorage-based All Seasons Argo and Equipment is used to the vehicles being a hot item during the spring/ summer season. But this year was different. Early shoppers and sales promotions accelerated the company's inventory flow way beyond normal. "My vehicles were going out the door faster than I could get them here," says owner Debbie Bontems. "I pushed my June order up three times and ended up shipping it May 30."

Thanks to a $250,000 "flooring" credit line from First National Bank Alaska, Bontems was able to keep up with the demand. She accessed funds from the line to increase orders, and maintained adequate cash flow until the rigs could be shipped in from Canada--a four-week process--and sold.

While the flooring line came in handy for ramping up orders this year, Bontems initially opened the line in 2005 to reduce shipping costs by ordering Argos in larger quantities. Shipping just one of the five-foot-by-ten-foot vehicles runs about $1,700, compared to $1,200 each for twelve of them. Now the company orders twelve Argos at a time instead of eight, which translates into lower costs for customers. "Thanks to financing, we retail our Argo products at the same MSRP as any dealer in the Lower 48, who pays less than half in freight cost compared to us here," Bontems explains.

Bontems maintains the credit line from year-to-year, regardless of whether or not she uses it. She appreciates having access to the backup capital and a positive relationship with the bank. "We have been very appreciative of First National's personable approach to a professional relationship; it's a rare trait these days," she says. "It is also noteworthy that they have willingly negotiated terms to be more accommodating. In short, they listen and value customer loyalty."

Flexible Financing

All Seasons Argo is among a significant number of businesses that are using a line of credit to maintain and grow operations. Credit lines are a common and convenient alternative to term loans, which differ significantly. With a term loan, all of...