Restaurateur Scott McVean originally established Pain du Monde Cafe in a small Balboa Island storefront in 1988, selling fresh-baked bread, muffins, and delicate pastries. Over the years Pain du Monde Cafe, known also as PdM Cafe, expanded to four locations, all of which are located in Orange County, California. In 2013, McVean decided it was time to grow the brand and establish Pain du Monde Kitchen, a full size, free standing, three meal restaurant. Despite being in business more than 25 years, Scott had never applied for financing from a bank. However, working with Commerce National Bank's Nancy Russell, was able to get the project funded, establish his new location, and hire approximately 55 employees in the process.
According to McVean, "This is a totally different business than my other four locations, and the capital requirements are much more intensive. I couldn't have done it without SBA and Commerce National Bank." Pain du Monde's newest location, in Irvine, has now been open more than 5 months. McVean, for his part, is enjoying serving the community around his newest location. "It has a different feel than my other locations. People stay here after their meals and chat. We've got a lot of families that come in."
Inland Empire Based Small Business Receives Federal R&D Grant, Sees Commercial Applications for Sensor Technology
Fontana, Calif. based small business becomes client of TriTech SBDC, secures SBIR award, sees potential commercial applications for technology developed under grant funding by the Department of Defense
SANTA ANA, CA – Research and development of new technologies and products can be prohibitively expensive for a small business to consider, but a Phase I Small Business Innovation Research (SBIR) grant provided by the Department of the Navy to Fontana, Calif. based Hal Technology, Inc., will help the company do exactly that.
The company, which designs and manufactures environmental monitoring instruments, received the award in response to the Department of the Navy’s 2012 annual SBIR solicitation. In the solicitation, one of the topics identified by Navy as being a priority for R&D was to develop a dust sensor for real-time engine health monitoring. Given that prolonged sand and dust exposure leads to gas turbine component degradation and ultimately failure, a sensor could help identify issues before a catastrophic failure were to occur. Although primarily designed for military aero-turbine engines, the sensor would also be applicable to civilian aircraft and ground-based vehicles.
Under Phase I of the award, Hal Technology will produce and demonstrate a prototype sensor capable of measuring load rates which will lay the foundation for development of an advanced composition-capable sensor in Phase II, a first of its kind breakthrough in particle or dust detection technology. In Phase II, the company will then develop a detailed design and build an advanced prototype sensor ready for integration into the selected engine system for operational assessment such as F135 engines used on US military F-35 fighter jets. For Phase III of the award, Hal Technology will work with the selected engine OEM to develop a certification plan and perform flight and ground testing. The immediate benefit of this technology is that it would give early warning for aircraft safety purposes when flying in high dust environments such as sandstorms and volcanic eruption zones.
“We have a potential to utilize such a technology developed under SBIR funding to advance the existing particle detection technology and add a new capability to existing commercial products. Particle sensor and instruments have already been used in monitoring clean facilities of electronics, pharmaceuticals, aerospace, etc. and now are growing into general public application in outdoor and indoor air quality market for environmental and health concern,” said company owner Dr. Hai Lin.
Hal Technology, a small business based in Fontana, became a client of TriTech Small Business Development Center after being referred by Mark Weifenbach at California Manufacturing Technology Consulting (CMTC). TriTech is partially funded by the SBA and works with high technology, rapid growth companies by helping them identify capital resources, commercialize new technologies, market products and services, and become investor ready. The business was established in 2004 by Hai Lin, Ph.D. and got its start as a home-based consulting firm helping other companies develop sensors and other commercial products. From there, the company expanded its lines of business by offering sales through worldwide manufacturers and distribution channels. Currently, the business is starting to manufacture its own products in-house.
Through the SBIR program, which was legislated by Congress in 1982 in order to help small businesses fund the technical feasibility of innovative ideas, small businesses can compete for federal research and development grants from participating federal agencies that can be used for early stage feasibility and prototype studies. Each year, participating federal agencies establish a “shopping list” for small firms describing what technologies are needed and available to fund. Interested businesses submit proposals based on these identified needs. For more information including solicitations, awards, news and events, please visit www.sbir.gov. Local small businesses interested in pursuing SBIR/STTR grants can receive free business consulting through TriTech SBDC. For more information about TriTech SBDC, please visit www.tritechsbdc.com.
Small business with offices in Placentia and Redlands obtains SBA guaranteed refinance in June, saves $7500 per month, creates 6 jobs and plans to hire 2-4 more
SANTA ANA, CA – George Squires had a successful career working as a Vice President for a distributor of office equipment when he discovered an opportunity to purchase the distribution rights to a proprietary platform for delivering purified water. Curious about the market potential and product, Squires conducted some research and discovered that bottled water sales exceed $12 billion in the United States annually and more than 70% of workplaces offer free bottled or filtered water to their employees. He also recognized the technology behind the delivery method for most businesses was antiquated, having stayed fundamentally similar to the days when animal skins and wooden carts were used for transportation as opposed to five gallon bottles and delivery trucks.
Confident that there was a market for purified water and that the product his company would offer is superior to others available, Squires launched Pure Water Technology, Inc. in April of 2006.
The business grew at a healthy rate for the first few years until 2009, when Squires started to notice that his typical clients were having difficulty obtaining credit from traditional funding sources. Squires decided to ramp-up the company’s in-house financing program to help counter this trend. He needed to secure outside investors to buy into the opportunity he saw.
Squires pitched the opportunity to a couple of venture capitalist friends over lunch in Newport Beach who subsequently invested in the company. There was a catch though: the money was expensive, with a management fee of $5,000 and a 12% interest rate on his line of credit.
He knew that refinancing the debt later down the road was the only option if he wanted to be able to pay off his investors and grow the company at the same time. By obtaining more reasonable terms on his financing, he could save $7500 per month which could be immediately invested into increasing his sales and service workforce.
Squires initially had difficulty securing the SBA refinance as a change in his company’s accounting practices from cash to accrual basis led to a reported loss in his business tax returns. Lending officers at several banks saw the loss, politely declined, and asked him to return when he could demonstrate three years operating history without a loss.
But the company wasn’t losing money. It was growing. In fact, even with no additional sales this year, the company would have more than $90,000 per month in residual income through its water service agreements. Early in the company’s history, Squires decided that their placement model would not be to sell the water cooling & purification systems, but to provide a service and maintain title to the equipment, similar to a cable TV or utility company.
Squires later met Jared Johnson, who works for U.S. Bank’s Rancho Cucamonga office, and submitted a loan request. Johnson worked with the bank’s underwriters to review the financial statements closely and ultimately decided to fund the SBA guaranteed loan.
Squires, who has since hired six staff members and is looking to hire two to four more in the short term, credits the underwriter and loan officer at U.S. Bank for taking the time to analyze his financial statements in detail and asking specific questions about his business model. Though Pure Water Technologies would have been able to continue operating without the financing in place, the line of credit has allowed the company to expand its workforce. According to Squires, “We’re still in the early adoption stage with this technology. SBA guaranteed financing has given me enough breathing room to grow my business and take advantage of this emerging market.”
To be eligible to refinance a business loan into an SBA guaranteed loan, the existing debt must not presently be on reasonable terms. This is defined as a 10% improvement in the company’s cash flow as measured by the changes in the debt service requirement between the existing and new debt structures. The substantial benefit for businesses wanting to refinance a revolving line of credit or balloon note lies in the ability to stretch payments out over a longer maturity, thereby retaining its working capital for a longer period. This “terming out” frequently benefits small businesses experiencing growth and is acceptable SBA refinancing justification.