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Maine

Intermediary Relending Program

Outline of Need:
Wrabacon, Inc. was established in 1986 to design and build food and drug packaging systems for customers throughout the United States. It is located in a rural community with a population of less than 6,000 and an unemployment rate equal to 123% of the State unemployment rate.

The company has approximately 13 employees primarily consisting of highly skilled engineers and technicians with an annual payroll of $600,000+-.

Wrabacon, Inc. has an advantage in the industry in that it has the capacity to both design and build the packaging systems resulting in lower costs, tighter timetable for completion and reduced communication errors. The company’s customers include Kraft Foods, Proctor & Gamble, Ben & Jerry’s, and Quaker Oats Co.

As a design and manufacturing facility, the company is affected by many of the same economic factors that affect its customers. The economic slow down that began in 2001 had a deep affect on the company’s sales and cash flow. With the economic recovery, the company is now experiencing increased orders and sales, and has a need for additional working capital.

How Rural Development Helped:
Using Intermediary Relending Program funds received from Rural Development, the Kennebec Valley Council of Governments provided $150,000 “gap” financing for a term loan to pay down the accounts payable and fund other operations. This financing allowed Wrabacon, Inc. to successfully apply for a $245,000 line of credit from their commercial lender, Peoples Bank.

The Results:
This combination of financing provided Wrabacon, Inc. with the needed working capital to allow continued growth in sales and success of the business.

Because of the business growth and increase in orders, the owners of Wrabacon, Inc. are now contemplating the construction of a 30,000 square feet addition to their existing building which will allow them the needed storage and workspace for the manufacturing of their packaging systems. They expect such an expansion will require an additional 10 to 15 employees.