HomeMy WebLinkAbout18 - Economic Development Comittee Report on Financing Sources for Business in Newport BeachCITY SOF NEWPORT BEACH May 13, 1996
/eWPp Hearing Date
PLANNING/Bl ING DEPARTMENT Agenda Item Nc, 18 6�)
u = 33oo NEWPORT BOULEVARD
Staff Person: John Douglas
C,CI Foa"T NEWPORT BEACH, CA 92658 (714) 644-3230
(714) 644-3200; FAX (714) 644-3250
COUNCIL
CITY OF NEWPORT BEACH
REPORT TO THE MAYOR AND CITY COUNCIL
SUBJECT: ECONOMIC DEVELOPMENT COMMITTEE REItURT ON
FINANCING SOURCES FOR BUSINESS IN NEWPORT BEACH
SUMMARY: The Economic Development Committee has prepared a report on financing
sources for business in Newport Beach and requests that the City Council
make the report available to the general public.
SUGGESTED
ACTION: If desired,
Receive and file Economic Development Committee report titled
Organizations, Institutions & Government Agencies Offering Financing for
Business and direct staff to make the report available to the business
community and the general public through the City's Internet Home Page
and other appropriate methods.
The attached report was prepared by the Finance Committee of the Economic Development
Committee. The Committee has also offered to provide regular updates to the report in order to
ensure that the information remains current.
Staff wishes to express our appreciation to Finance Committee Chairman David T. Blankenhorn
and Committee members John Houten, Tod Ridgeway and Gregg Schwenk for their valuable
efforts in compiling this report. The support of these and other volunteers is essential to the
continued success of the City's Economic Development Program.
Respectfully submitted,
PLANNING AND BUILDING DEPARTMENT
Hlanner
jJo H.Princ
Attachments: EDC Report
C:\WIN...\ECON-DEV\EDC\REPORTS\CC\FINANCE 1.DOC
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CITY OF NEWPORT BEACH
ECONOMIC DEVELOPMENT COMMITTEE
April 25. 1996
Honorable Mayor and City Councilmembers
City of NeN\port Beach
3300 Newport Boulevard
NeNvport Beach, CA 92663
Re: Firzcrricia! Information Package
Dear Council Members:
«'e are pleased to send the enclosed packet of information for your review and action. It
provides existing and prospective business owners in Newport Beach with the various sources
and methods of financing their individual business requirements. These can include any
legitimate need that contributes to the betterment and improvement of their individual enterprises
which indirectly benefits the City of Newport Beach.
This information was prepared by the Finance Sub -Committee which included David T.
Blankenhorn. John Houten, Tod Ridgeway and Gregg Schwenk. We appreciate their efforts
in putting this together.
We are asking the Council to direct the City staff to make this document available to businesses
and others and recommend this information be included in a «'EB site whenever that is
appropriate.
Because of the constant changes in programs and contacts, the Finance Sub -Committee will
update the material on a quarterly basis and forward the changes to the appropriate staff person.
�--Sincerely. �
Rush Hill, CLnnan
Economic Development Committee
Enclosure: Financial Information Package
ORGANIZATIONS, INSTITUTIONS
and GOVERNMENT AGENCIES
OFFERING FINANCING for BUSINESS
CITY OF NEWPORT BEACH
ECONOMIC DEVELOPMENT PROGRAM
April 1996
Organizations, Institutions & Government
Agencies Offering Financing for Businesses
Table of Contents
(1) Commercial Banks......................................................................... 1
AttachmentIA - Bank Listing.............................................................. 2
(2) Small Business Administration Loans ............................................ 8
Attachment 2A - SBA Program Overview ................................................. 9
Attachment 2B - SBA Lender Listing .................................................... 10
(3) Commercial Finance Companies ................................................... 13
Attachment 3A - Commercial Finance Company listing .............................. 14
(4) Leasing Companies....................................................................... 16
Attachment 4A - Leasing Companies listing ........................................... 17
(5) Other Agencies and Governmental Bodies .................................... 18
California Small Business Development Centers (SBDCs) ........................... 18
California Financial Corporations........................................................ 18
Loan Guarantee and Bonding Assistance .......................................... 18
Direct Loans: CLEAN Loan Program ............................................... 18
Direct Loans: RUST Loan Program ................................................. 19
Direct Loans: Fishing Fleet Program ............................................... 19
Contacts/Help Line................................................................... 19
Community Development Block Grants(CDBG)....................................... 20
Cityof Newport Beach General Funds .................................................. 20
(6) Venture Capital/Equity Firms ...................................................... 21
Venture Capital/ Equity Firms listing .................................................... 22
(7) Mixed Use Financing.................................................................... 26
MixedUse Lenders listing................................................................. 27
r-
(1) Commercial Banks
Banks offer loans to businesses for any business purpose on either a
conventional basis or through government guarantee programs such as
the Small Business Administration.
Attachment 1A is a listing of commercial banks with offices within Orange
County together with a local contact, telephone numbers, types of
financing offered, minimum and maximum amounts, and preferred
industries.
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(2) Small Business Administration Loans
In 1953, Congress created the Small Business Administration to make
sure that federal funds and resources would be used to help finance
qualified small enterprises, and thus contribute to a viable small business
community across the country.
Attachment 2A is an outline of the programs offered under this Guarantee
Program, what businesses qualify, and the terms and conditions of these
programs.
Attachment 2B is a listing of the most prominent lenders that offer this
program with local contract and minimum amounts.
Page 8
Attachment 2A
SMALL BUSINESS ADMINIST—RATION LOANS
These loans are extended `various institutions for qualified !� all businesses.
The following is a list of criteria.
Qualifications
♦ Independently owned and operated. l
♦ Is not dominant in its field. l
♦ Meets SBA employment or sales standards.
• Manufacturing- Up to 500 employees (up to 1,500 in some industries).
• Wholesaling- Up to 100 employees.
• Retailing & Service - Average annual sales did not exceed $5.0 million(up to $14 million for
some industries).
• General Contracting- Average annual receipts did not exceed $17 million for the preceding
three fiscal years.
• Special Trade Construction - Average annual receipts did not exceed $7 million for the
preceding three fiscal years.
♦ Owners must be of good character, with strong management skills.
♦ Business has a viable net worth.
♦ Company has demonstrated ability to repay loan, based on historical cash flow.
♦ Collateral is reasonably adequate to secure the loan.
Loan Purposes
♦ To purchase existing land and/or buildings.
♦ To construct new commercial buildings.
♦ To refinance existing debt for compelling credit reasons which benefit the borrower.
♦ To purchase machinery, equipment, fixtures and leasehold improvements.
♦ To expand or modernize facilities.
♦ To finance increased receivables and/or inventory.
Maximum Guarantee
♦ SBA guarantee totaling a maximum of $750,000 or $1,000,000 for companies engaged in
exporting.
♦ More than one loan is possible.
Interest Rates
♦ Variable rates.
♦ Rate indexed to the lowest prime rate as listed in the Wall Street Journal.
♦ Floats at fixed percentage rate over the lowest prime rate.
♦ Adjusts quarterly.
Terms
Up to 25 years on "Business Use" real estate purchases, construction or refinance.
♦ From 7 to 15 years on equipment purchases.
♦ Up to 7 years for working capital.
♦ Up to 5 years for lines of credit.
Collateral
♦ Deed of trust on residence and/or commercial real estate.
♦ An encumbrance on equipment and/or chattel.
♦ Assignment of receivables and inventory.
♦ Personal guarantees of officers, directors and stockholders owning 20% or greater or
influential in business operation. �-
Page 9
SBA Lenders
Attachment 2B
Institution Min. Loan Max. Loan
AT&T Capital Corp. $25,000 $1.2 Million
6381 Fallingwater Drive
Huntington Beach, CA 92647
(714) 842-2380 (714) 842-4013
Julie Johnson, Regional Accounts Mgr.
Bank of America $5,000 No maximum
621 North El Camino Real
San Clemente, CA 92672
(714) 951-4007 (714) 498-1614
Dan Moynihan, Community Dev. Officer
Bank of Commerce $25,000 $2.5 Million
765 The City Drive, Suite 255
Orange, CA 92668
(714) 748-7307 (714) 748-7320
Robert Flores, Sales Manager
Bank of Yorba Linda $50,000 $1.2 Million
25431 Cabot Road, Suite 204
Laguna Hills, CA 92653
(714) 452-0922 (714) 452-0933
David H. Scherer, Sr. VP
California State Bank $25,000 No maximum
1201 Dove Street
Newport Beach, CA 92660
(714) 851-9900 (714) 851-0273
Rich Jett, Executive VP
Eldorado Bank $75,000 $2 Million
2730 East Chapman Avenue
Orange, CA 92669
(714) 633-2922 (714) 633-1539
J.B. Crowell, Chairman/CEO
First Interstate Bank
5000 Birch Street
Newport Beach, CA 92660
(714) 253-4268 (714) 253-4337
Carol Lowry, SBA Sales Mgr.
SBA Lenders
. .. .. .. . ... .. ..
Page 10
Institution
Government Funding;/CenFed Bank
198 West Lincoln Avenue, 2nd Floor
Anaheim, CA 92805
(714) 517-8220 (714) 517-8299
Christopher Woodard, Sr. Loan Officer
Heller First Capital Corp.
600 Anton Boulevard, Suite 950
Costa Mesa, CA 92626
(714) 444-9013 (714) 444-9020
William Cyril, Area Manager, Bus. Develop.
Imperial Bank
695 Town Center Drive
Costa Mesa, CA 92626
(714) 641-2200 (714) 641-2219
Dennis Rhorbacker, Sr. VP
Liberty National Bank
7777 Center Avenue
Huntington Beach, CA 92647
(714) 895-2929 (714) 894-5257
Catherine Clampitt, Sr. VP/SBA Manager
Los Angeles National Bank
7025 Orangethrope Avenue
Buena Park, CA 90621
(714) 670-2424 (714) 670-2499
Henry Chen, CEO/President
Money Store Investment Corp.
1 Park Plaza, Suite 450
Irvine, CA 92714
(714) 251-9010 (714) 251-9016
Wayne A. Wirth, VP/Area Sales Mgr.
National Bank of Southern California
625 The City Drive South
Orange, CA 92668
(714) 748-8643 (714) 663-9434
William Jacoby, Chairman/CEO
Min. Loan -
$25,000
$50,000
$50,000
$25,000
$10,000
$25,000
$25,000
Max. Loan
$1.8 Million
$2.3 Million
$2 Million
$1.5 Million
$1 Million
$2.5 Million
$2.5 Million
SBA Lenders
Page 11
Institution
Orange National Bank
274 North Glassell Street
Orange, CA 92666
(714) 771-4000 (714) 639-2051
Joan K. Earhart, 1st VP/SBA Mgr.
Pacific National Bank
41 Corporate Park, suite 300
Irvine, CA 92714
(714) 442-9400 (714) 442-9444
Rachel Castrey, VP/SBA Mgr.
Sunwest Bank
501 South Main Street
Orange, CA 92668
(714) 541-3201 (714) 541-4367
Richard Sams, VP/SBA Mgr.
Union Bank
18300 Von Karman Avenue
Irvine, CA 92715
(714) 553-7079 (714) 553-7032
Clint Faltermayer, VP
SBA Lenders
Min. Loan Max. Loan
$25,000 $2 Million
$25,000 $2 Million
$50,000 $1.3 Million
$50,000 $1 Million
Page 12
(3) Commercial Finance Companies
Commercial Finance companies are non regulated private and public
companies that offer loan services for businesses. In some cases, they
offer financing to certain businesses that may not qualify under bank
criteria and/or they offer longer financing terms.
Attachment 3A is a listing of some Commercial Finance Companies located
within Orange County.
Page 13
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(4) Leasing Companies
Leasing companies offer lease type financing on equipment and other
business assets. In a lease program, the leasing company actually owns
the equipment and leases it for a specific term to the business. There can
be certain tax and off balance sheet advantages to this type of financing.
Attachment 4A includes a listing of several leasing operations located in
Orange County.
Page 16
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(5) Other A_gencies and Governmental Bodies
5A — Califorriia Small Business Development Centers (SBDCs)
Small Business Development Centers (SBDCs) link federal, state,
educational and private resources designed for small business in the local
community. The Centers provide one-stop access to business counseling,
planning, marketing and training programs.
Through the statewide Centers, small businesses may obtain valuable
information on how to access the international marketplace or how to take
advantage of available programs. The SBDCs also prepare and provide
data on economic and business conditions and offer education and
training workshops. Some Centers specialize in export assistance, high
technology resources and disaster relief assistance to meet community
needs.
Main SBDC Office: Orange County SBCD Office
801 K Street, Suite 1700 901 East Santa Ana Boulevard, Suite 101
Sacramento, CA 95814 Santa Ana, CA 92701
(916) 324-1295 (714) 647-1172
5B — California Financial Corporations
The California Financial Corporations (CFCs) provide loan guarantees,
bond guarantees and make available special direct loans to qualified small
business owners. The loan guarantee program has the capacity to
guarantee over $120 million for small businesses. Programs offered
include the following:
Loan Guarantee and Bonding Assistance
The Loan Guarantee Program provides loan guarantee financing, up to
$350,000, on revolving lines of credit, small loans, and agricultural loans.
The State Bank Guarantee Program is designed to assist small, minority
and women contractors in securing bond guarantees up to $500,000 from
surety companies for highway related projects and other public works
projects.
Direct Loans: CLEAN Loan Program
The California Loans for Environmental Assistance Now (CLEAN) assists in
financing the purchase of equipment or production practices that will
bring a small business into compliance with direct air pollution
regulations. The maximum loan is $750,000 with a term of 7 years.
Contact: California Office of Small Business
(916) 445-6733
Page 18
5B — California Financial Corporations (continues)
Direct Loans: RUST Loan Program f
The Repair Underground Storage Tank (RUST) Loan Program assisted in
financing the replacement, removal or repair of petroleum underground
storage tanks: There is a 2 percent loan fee, up to 20 years term with a
fixed low interest rate and a maximum loan amount of $350,000
Contact: California Office of Small Business
(916) 323-9879
Direct Loans: Fishing Fleet Program
The Fishing Fleet Program provides a maximum loan of $25,000.00 to
owners of commercial vessels that require retrofitting to improve the
operating fuel efficiency. The interest rate is 5 percent and the term is 5
years. Engine replacement, electronics for fuel management/fuel flow
meters are some examples.
Contact: Mitch Culliver
(916) 323-4388
CONTACTS:
Hancock
3600 Wilshire Boulevard, Suite 926
Los Angeles, CA 90010
(213) 382-4300
OR USE
Pacific Coast Regional Office
3255 Wilshire Boulevard, Suite 1501
Los Angeles, CA 90010
(213) 739-2999
The Help -Line — (800) 303-6600 OR (9161 327-4357
The California Small Business Help -Line is sponsored by the California
Office of Small Business of the California Trade and Commerce Agency. It
is available 24 hours each day with a touch-tone telephone.
Topics include:
♦ Financial assistance to small business
♦ Management and technical assistance to small business
♦ Referrals to state agencies that certify for the small business,
minority/women and disabled veteran business enterprise programs
♦ Small business publications
♦ Selling to state agencies
♦ Federal Small Business Administration's financial assistance programs
♦ Selling to federal agencies.
Page 19
5C - Community Deve
!)ment Block Grants (CDBG
The City of Newport Beach qualifies annually for $400,000 to $500,000 for
money from the Federal Government. These funds must be used for social
services.
Criteria:
a) Job Creation - An example would be economic assistance for job
training for disadvantaged persons.
b) Multi year or single year funds.
c) Public area maintenance to subsidize salaries for disadvantages
persons working for BIDs.
5D - City of Newport Beach General Funds
A new business could ask for money from the General Fund of the city to
provide a Capital Improvement for a legitimate public purpose. The loan
request would be subject to City Council approval and would compete with
all other city agencies.
Page 20
(6) Venture Capital/
Equity Firms
Venture capital organizations and other investment firms provide equity
investment funds for growing companies. Each firm has its unique criteria
which is outlined in Attachment 6A. We have only included companies
with minimums under $1 Million.
Page 21
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(7) Mixed Use Financing
The City of Newport Beach includes areas with mixed use zoning laws.
Current requirements call for a 2:1 residential to commercial space
balance, i.e., for every square foot zoned as commercial, 2 square feet
must be designated as residential space.
Loans on these types of properties are more difficult to underwrite
resulting in a smaller number of lenders engaged in this activity with more
expensive pricing.
Attachment 7A contains a list of lenders currently active in this area.
Page 26
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