Disabled Veteran Business Owner Boosts Business and Buys Property Thanks to Innovative Commercial Lender, Programs

  • September 10, 2018

SBA lending program through Arizona-based lender provides solution when conventional loans were not available.

 

Kevin Darroch had a great opportunity in front of him. And a big problem.

 

Darroch is a disabled veteran of the U.S. Air Force and the owner of Carlsbad, California-based MachineTek, which provides fabrication and profiling component services for companies like SpaceX, Bell Helicopter, Northrop Grumman and Lockheed — essentially, parts used in airplanes and spacecraft.

 

Recently, the 20-year-old company finally had the opportunity to purchase the 21,000-square-foot manufacturing facility it had been leasing since 2008. But because of the economic downturn, MachineTek had only modest financial results in recent years — making it extremely difficult to finance the purchase.

 

“Conventional real estate lenders declined to consider the deal,” Darroch said. “And while the Small Business Administration’s local Certified Development Corporation supported the project, they confirmed the difficulty of finding a lender willing to look beyond the numbers to get the deal done.”

 

Then Darroch found AVANA Capital, an Arizona-based commercial real estate lender with a nationwide lending profile — and the ability to “look beyond the numbers” to find a solution.

 

“We knew the SBA has programs that assist disabled veteran business owners it is actively looking to put to use,” said Sanat B. Patel, Managing Partner of AVANA Capital. “When we found out about Kevin’s desire for his company to buy their building, we realized this could be a great opportunity to put those programs to work.”

 

The SBA has an entire section dedicated to Disabled Veteran Small Business Owners, which you can read more about here: http://www.sba.gov/content/veteran-service-disabled-veteran-owned.

 

Additionally, the environmental firm who performed the Phase I Environmental Report on the property also contributed to the closing by providing a timely due diligence service. The firm, Odic Environmental, is led by president Eric Miller, who is also a disabled veteran and has won Veteran of the Year recognition from the SBA Santa Ana District. Odic Environmental is a professional, environmental consulting company, certified by the State of California as a DVBE/SDVOSB/SBE firm. More information about the firm is available at www.odicenv.com.

 

The path to funding may not have been easy, but AVANA’s team, working alongside the CDC and coordinating closely with MachineTek’s management team, was able to ascertain MachineTek’s creditworthiness and ability to responsibly transition from renter to property owner. The end result was an SBA 504 loan solution for MachineTek to purchase their existing space.

 

And, due to the lack of financing available at the time, MachineTek had been carrying out tenant improvements to make the space more suitable for their manufacturing process. AVANA was able to include these past tenant improvements in the loan solution, as well as financing for improvements that will be accomplished after the purchase.

 

The approximately $2.4 million deal not only helped MachineTek with the financing and renovation of the building, it helped stabilize the company’s finances, preserving an estimated 39 jobs in the process.

 

When the long process finally concluded in a successful funding and purchase, many experts shared their opinions the deal had been a “long shot, at best.” But as Darroch said after escrow closed, “The CDC, Elle Jameson (AVANA’s Business Development Officer), and the entire AVANA underwriting team endeavored to find a way to provide the needed financing. AVANA Capital proved a motivated and creative lender can put even a long shot in the cup!”

 

Merri Adams, Commercial Loan Officer at CDC Small Business Finance said AVANA Capital was the ideal partner for such a loan.

 

“The underwriting team was highly responsive and creative in their approach to solving the challenges and complicated structure of this transaction,” she said. “Elle Jameson is very knowledgeable and pulled the entire transaction together so that we were all working toward the common goal of helping the borrower purchase his building.”

 

AVANA Capital specializes in these types of SBA and USDA loans for small- and medium-sized businesses across the country. Since 2005, the company’s financing of more than $600 million that has created or preserved more than 9,000 jobs in 30 states across the country.

 

“It is very gratifying to be able to help someone like Kevin, who not only has a great business that deserves to succeed but has also served our country honorably as well,” Sanat said. “These are the kinds of businesses we particularly enjoy working with, and it’s great that the SBA and USDA programs we work with are accommodating to these borrowers so that they can help grow our economy.”