February 1, 2016–CEI 7(a) Financing LLC (“C7a”), a Small Business Administration 7(a) lender, today announced it has closed its first two transactions and has grown its staff since launching in 2015.
The first transaction was a $1 million SBA 7(a) loan that allows longtime restaurant owners Selina and Lam Lum to purchase the Sarasota, Florida building they had been leasing to operate their award winning Taste of Asia Restaurant. Without this loan the Lums would have been forced to relocate their family business, and abandon a variety of capital improvements and brand equity that they built.
“We’ve worked so hard to establish the restaurant and to improve the space, it’s a dream come true to own the building,” said Mrs. Lum. “It’s an enormous weight off our minds not to have to worry about whether the lease will be renewed or how the rent might change. We can focus our energy on our business and our customers now.”
In the second transaction C7a facilitated was a $250,000 SBA 7(a) loan to enable a specialty metals fabricator servicing the architectural and construction industries to be acquired as its founder was retiring. The successful transition of ownership also served to preserve the jobs for the ten employees working at the purchased business, which might not have happened if the firm had closed or had been purchased by a larger competitor.
In both cases, neither business owner was able to secure traditional bank financing. The SBA 7(a) program provides the flexibility to finance business transactions that traditional bank lenders might have a hard time underwriting due to a variety of reasons ranging from lack of collateral to a limited business track record or the need for longer than conventional terms.
Colette Twigg-Rowse of C7a who is responsible for credit and portfolio management describes the Lum family’s purchase as a classic 7(a) financing. “Although they are experienced restaurateurs, they had been operating in that location for less than three years and their finances are just recovering from the turmoil of the great recession. They run a good business but, as an ex-banker, I’m not surprised that they were unable to get a loan from a bank,” she said.
Similarly, the need to transition ownership upon the retirement of the metal working business’ founder also follows a trend in SBA lending. “It’s very rewarding to see successful ownership transitions like this where the retiring owner can ‘cash out’ some of the value they’ve worked to create over the years and the next generation steps in all fired up and ready take the business into a new era. I know the new owner intends to be in a position to grow the business and hire more people in the coming years,” Twigg-Rowse added.
As C7a establishes its market presence it has hired Mary Childs-Mayer as its Origination and Relationship Manager. A senior member of the C7a team, Mary is responsible for developing and managing the company’s origination partnerships and transaction pipeline. She joins from National Development Council, a Community Development Finance Institution (CDFI) where she held a variety of progressive responsibilities for two decades.
Experience in the CDFI field is especially important as C7a seeks to partner with a diverse network of partners to identify lending opportunities, including peer CDFIs that share a community development mission. Indeed, the Lum family was introduced to C7a by a Sarasota-area CDFI.
“We’re a national SBA 7(a) lender but our model is different from most” explained C7a’s CEO, Rob Wilson. “We partner with mission based lenders and organizations across the U.S. to identify lending opportunities because we believe that local connections with the community are vital. C7a is owned by a non-profit CDFI and that heritage means we understand mission oriented lenders and community development lending pretty well, which makes for good partnerships.”
C7a is one of a small number of non-bank lenders licensed by the Small Business Association to participate in the SBA’s flagship 7(a) loan guarantee program. C7a shares a mission with its non-profit parent organization, Coastal Enterprises Inc. (“CEI”), to help individuals and communities reach their full potential. By providing small business loans of up to $2,500,000 throughout the contiguous U.S., C7a broadens the financial product offerings of, and brings increased lending capacity to, C7a’s local partners, that include community organizations, CDFI’s, community loan funds, and banks. In turn these partners connect C7a with the local communities and make it a more effective lender.
For information contact Rob Wilson, 207 253 7715 or rwilson@CEI7a.com.