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The Redlands company that arranges government loans to small businesses is partnering with the Small Business Development Corporation of Orange County, a similar operation. The arrangement comes at an ideal time for small business expansion, according to the heads of both entities.
In the 37 years he’s been arranging loans for small businesses, Jeff Sceranka says he’s never seen a better market than the one he’s working in now.
“It’s almost historic it’s so good,” said Sceranka, founder and president of Enterprise Funding Corp. in Redlands, which sets up loans to small businesses through the U.S. Small Business Administration. “There’s no way of knowing how long it’s going to last, but I’ve never seen it like this, and I may never see it this way again.”
Sceranka made those remarks to about 60 people March 4 at Enterprise Funding’s annual meeting in Redlands. He was referring to the record low interest rates – 3.7 percent for a 10-year loan, 3.3 percent for a 20-year loan and 3.5 percent for a 25-year loan – that are available to anyone looking to start or expand a small business.
Enterprise Funding, which Sceranka founded in 1983, specializes in SBA 504 loans, which provide funding for the purchase of fixed assets, like a building or equipment. It defines a small business as one with less than $5 million in net income during the last two years, and under $15 million net worth.
Since its began, Enterprise Funding has helped create or retain nearly 11,700 jobs and engaged in more than $850 million worth of projects in close to 100 cities, according to company officials.
It has 143 active loans in its portfolio, which is worth just under $70 million.
A 504 loan is distributed three ways: The borrower/business owner puts up at least 10 percent, a bank or conventional lender puts up 50 percent, and a certified development company – the category Enterprise Funding falls into – puts up the remaining 40 percent.
Interest rates for a CDC are tied to treasury bills, or t-bills, which are short-term U.S. government debt obligations backed by the U.S. Treasury that mature in one year or less.
Currently, that interest rate is 2.9 percent. For the last three years or so, they’ve been closer to 3.5 percent.
Against that backdrop, Sceranka announced that Enterprise Funding has partnered with another CDC, the Small Business Development Corp. of Orange County in Santa Ana.
Both financial institutions have been friendly for years and have occasionally worked together. Now they will share resources and office space, and refer to clients to each other whenever appropriate, according to officials on both sides.
The agreement, which took about six months to put together, was announced at the annual meeting to enthusiastic applause.
“This is going to open up a lot of opportunities for small businesses in both markets,” Sceranka said. “We’re both looking to increase our influence in the market, and this affiliation will help us do that.”
Both companies employ six people. No staff cuts are planned, and Sceranka and Michael A. Ocasio, president and chief executive officer of Small Business Development, say that, in the next few months or so, they will work out a chain of command.
Small Business Development has agreed to change its name, although to what hasn’t been determined. Regardless of what it’s called, Small Business Development will continue to loan money to small businesses and to entities in underserved communities.
Both sides want to create a company that will loan money through SBA loans statewide, with an emphasis on the Inland Empire and Orange County, according to Sceranka and Ocasio.
“I’ve known Jeff for 30 years, we’ve worked together a few times and we’ve always gotten along well,” Ocasio said. “We’ve talked about doing this for years, and with the economy doing so well this seemed like the right time to do it.”
An affiliation – both sides were careful not to call it a merger – with Enterprise Funding is the best way for Small Business Development to make inroads in Riverside and San Bernardino counties, according to Ocasio.
“The Inland Empire is a large growing market and it’s perfect for what we do,” Ocasio said. “It has the central area where a lot is happening, and the two outlying areas, the Coachella Valley and the High Desert, that are underserved.”
The affiliation between Enterprise Funding and Small Business Development received a stamp or approval from Draymond Crawford, Enterprise Funding’s board chairman and a board member for more than 20 years.
“I think it’s a good move for both sides,” Crawford said. “It’s going to get more SBA loans out there, and that will be a good thing.”
Paul Russ, a former vice president with Citizens Business Bank and an Enterprise Funding board member for more than 10 years, said the partnership will create “good synergy” between the two companies.
“From the start I thought this was a good idea,” Russ said. “Both companies compliment each other, and they will create more SBA loans. That’s the best way to help grow small businesses.”
