Simplified Loan Process May Help Small Businesses with Expansion

GLENDALE — A Northern California nonprofit firm that packages government and private loans for small-business expansions opened an office in Glendale last week, targeting the Glendale and San Gabriel Valley areas for economic development assistance that could lead to new jobs.

The California Statewide Certified Development Corp. of Davis expects to distribute $40 million in commercial and industrial real estate financing to eligible companies, said Barbara Vohryzek, executive director.

The company, which opened Nov. 2 at 550 N. Brand Blvd., Suite 700, secures long-term, fixed-rate loans through private lenders and the Small Business Administration’s 504 Loan Program. The government program, which focuses on rural and distressed urban areas, is designed to fund building projects so firms can use their working capital to hire more people. Businesses can buy facilities and other fixed assets for as little as 10% down, or use the money for improvements, construction, renovation or restoration.

One of Statewide’s functions is to streamline the loan application process for business people who might not be familiar with the intricacies of federal programs.

Statewide formed in 1988 to link private capital with the SBA program to create 90% loans. The firm has primarily arranged agricultural loans but has identified the San Gabriel Valley as well as the South Bay and eastern Los Angeles County as growth areas for the 504 loan program, Vohryzek said.

Statewide Senior Lending Officer Roxann Middleton said the company focuses on demonstrably profitable small companies that have been in business for at least three years and have net worths of less than $6 million. Up to $35,000 can be loaned per employee to be added, with more flexible terms for companies that meet “public policy goals.”

Public policy goals embrace firms in business district revitalization areas such as enterprise zones and redevelopment districts (which exist in several cities’ downtown districts), companies that derive at least 10% of their revenue from exports and businesses that enhance economic competition, for example, by advancing technology or modernizing facilities.

Under a typical 504 financing, a private lender underwrites 50% of a project, the Small Business Administration finances 40% and the borrower puts up 10%. Statewide is paid 1 1/2 points on the SBA-guaranteed loan portion to originate the loan and half a percent on the outstanding balance on that portion to service the loan over the next 20 years.

The firm’s San Gabriel clientele includes Medi-Ride, which has contracts with the cities of Pasadena and Glendale to provide transportation services for the elderly and disabled. Statewide helped finance the company’s plan to buy and renovate a new high-visibility facility in Glendale in July, 1990.

Since then, Medi-Ride revenues have risen 20% and the company has increased its work force from 200 to 280, said Vince Schaub, Medi-Ride’s owner. Schaub explained the gains as “the result of being able to use our capital for expansion rather than buildings.”

Besides arranging financing, Statewide also has a mission to “work on broad economic development issues,” Vohryzek said. The company seeks to provide public financing for businesses unserved or underserved by government lending programs and to provide business development assistance to government entities, nonprofit development corporations and communities. Statewide employees work in various communities to help small businesses understand financing and growth, putting together loan packages when appropriate.

Vohryzek said she also plans to further the Statewide mission by working with economic development providers for cities in the San Gabriel Valley. Statewide can be reached at (800) 348-6258.