L.O.T.W. #159 - CarParts.com Tunes Up Balance Sheet with New Asset-Based Revolver
Secures a $25M asset-based facility, a step-down pricing grid, and a coverage test that idles until it's needed
In June 2026, CarParts.com (Nasdaq: PRTS) entered into a $25 million asset-based revolving credit facility with First Business Specialty Finance, LLC, secured by substantially all of the company's assets and backstopped by subsidiary guarantors. The facility replaces the company's JPMorgan Chase revolver, which was terminated with no balance outstanding, and provides working capital availability. Most notable is the covenant-light posture: the 1.10x fixed charge coverage test only springs into effect if liquidity falls below defined thresholds, while a pricing grid rewards stronger coverage with step-downs of up to 0.50%.
👓At a Glance
Origination Date: June 15, 2026
Borrower: CarParts.com, Inc.
Lender: First Business Specialty Finance, LLC
Deal Size: Up to $25.0 million (governed by borrowing formula)
Structure: Asset-based revolving credit facility
Rate: 1 Month Term SOFR + 3.25% (with step-downs)
Term: Matures March 31, 2028; auto-renews annually
Use of Proceeds: Replace terminated JPMorgan Chase revolver (no balance outstanding); working capital
Source: SEC 8-K
📷Borrower Snapshot
Sector: Consumer Discretionary
Subsector: Specialty Retail
Commercial Stage: Revenue Generating; LTM EBITDA -
Business Overview: CarParts.com is a leading online provider of aftermarket auto parts and accessories, selling replacement, hard, and performance parts to individual consumers through its flagship carparts.com website, mobile app, and online marketplaces, and to professional installers and wholesale customers through its wholesale platform. The company operates four U.S. distribution centers totaling over one million square feet and markets a portfolio of owned brands including JC Whitney, Evan Fischer, and Garage-Pro.
⚙️Structure & Terms
Source: SEC 8-K
Structure: $25.0 million asset based revolving line of credit
Maturity: March 31, 2028
Collateral: Substantially all assets of company; subsidiary guarantors under a security agreement
Rate: 1-Month Term SOFR + 3.25%, reduced by 0.25% if prior-year Fixed Charge Coverage Ratio is 1.10x–1.25x, or by 0.50% if it exceeds 1.25x
Repayment: Revolving; availability is the lesser of $25 million or a borrowing base on cash and cash equivalents, accounts receivable, and inventory. Mandatory prepayments from net proceeds of certain asset dispositions and sales of subsidiary equity interests
Borrowing Base & Advance Rates:
85% of Qualified Accounts (excluding qualified credit card accounts), net of payments in the process of collection
90% of Qualified Credit Card Accounts, net of in-process collections, capped at $5 million
Inventory, taken as the lesser of (i) 85% of Qualified Inventory at appraised net orderly liquidation value (NOLV) or (ii) 50% of Qualified Inventory at cost or wholesale market value, whichever is lower — capped at $25 million under this line
Less letter of credit reserves, sales tax reserves, and any other reserves the lender deems necessary in its sole discretion
Fees:
Closing facility fee: $125,000
Annual facility fee: $62,500 on each anniversary of closing
Unused line fee: 0.25% per annum on the average daily unused amount
Letter of credit fee: 0.25% per month on outstanding letters of credit
Overadvance fee: $1,000 per day (at lender’s discretion)
Minimum interest: $40,000 per calendar quarter
Prepayment premium on early termination: $750,000 before June 15, 2027; $500,000 on or after June 15, 2027
Financial Covenants:
Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on a trailing four-quarter basis — but only required when a “Liquidity Triggering Event” occurs, defined as (i) the sum of cash on deposit plus availability falling below $15 million, or (ii) availability alone falling below $7.5 million.
Customary negative covenants restricting additional indebtedness, investments, asset dispositions, dividends and stock repurchases, and liens.