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Aircraft Parts Business Flying High with Export Financing from SBA
Before the boom of e-commerce sites such as eBay and Amazon in the late 1990s, Jeffery Zaslow and Jeffery Cabel were already harnessing the internet to grow their business, Overseas Aircraft Parts.
Today, Zaslow and Cabel are again pioneering business growth in the rediscovered frontier of international exports. But instead of relying on emerging technology to reach new customers, the Deerfield Beach, Fla.-based businessmen credit the availability of capital through SBAs Export Working Capital Program as a key driver in their success.
Overseas Aircraft Parts opened its doors 22 years ago. Zaslow and Cabel previously worked together at a south Florida aviation company.
“I was the company CPA and Jeff was familiar with aircraft engines. When we started the company, Jeff’s knowledge of aviation and my finance background seemed to be a combination that would work” recalled Zaslow. “For me, the most rewarding part of opening our own business was not having to be worried about being forced out of work in the future because of age. Our futures were in our own hands.”
Overseas Aircraft Parts is like a neighborhood auto parts store. Like their counterparts in the auto industry, airlines rely on companies like Overseas to provide refurbished and certified parts and materials for their engines at a lower cost than that of the original equipment manufacturer, saving airlines millions of dollars. The business is also akin to a championship dog breeder because each aircraft part is backed with meticulous documentation detailing where it came from, as well as when and how long it was used previously. Parts are refurbished only at FAA-licensed facilities and parts from airlines involved in a crash or other incident type can’t be resold. “In this business, it’s all about paperwork and pedigree. The documentation and traceability we provide is as important as the actual parts we sell,” said Zaslow.
The aircraft parts industry is a billion dollar industry. However, there are fewer companies than what some may think. Zaslow credited their company reputation and attention to detail as key reasons why they have existed for so long.
With 70-80% of their sales going to overseas customers in Japan, China, Singapore, Turkey, Spain, and Portugal, online data bases, reputation and longevity have helped Overseas Aircraft Parts’ bottom line. But to lift the business to new heights, the availability of capital was needed.
“Selling good material is easy, but finding the right inventory is the difficult task. Our business is capital intensive and purchasing a used aircraft engine to refurbish or teardown could cost us $2-3 million,” said Zaslow. “The landscape is different than in the early 1990s. Financing has become more difficult and it’s even more difficult if you’re selling parts overseas.”
According to SBA International Trade Program Regional Manager Mary Hernandez, many banks are hesitant about lending capital when repayment is based on future payments by foreign buyers.
“E-commerce makes it easier for small businesses like Overseas Aircraft Parts to find potential markets overseas, but finding trade finance can be a significant challenge. The SBA-backed Export Working Capital Program (EWCP) loan allows lenders to mitigate their risk while providing their customers with much needed short-term working capital,” said Hernandez.
Through Suntrust Bank, Overseas Aircraft Parts has received several $2 million EWCP loans that gave them greater flexibility in negotiating export payment terms in advance of a sale or contract.
“This industry moves quickly so you need to have capital available to operate,” said Zaslow.
Overseas Aircraft Parts had their best year ever in 2012 with over $10 million in revenues. This year, they expect to exceed last year’s revenues by 20-25%. A large part of that success was their ability to access capital used to expand.
With humble beginnings in Coral Springs, the company has moved twice before landing at its present Deerfield Beach location. The company has grown to seven full time employees and owners Jeff Zaslow and Jeffrey Cabel are still looking into future opportunities and growth. The second generation is now at work as well with both owners sons working in the business, bringing with them fresh ideas and opportunities for continued growth.