Special SBA loan allowed Green Acres to buy Matsuda’s
From: Sacramento Business Journal, written by Ben van der Meer | See full article here.
When Green Acres Nursery wanted to both expand and become vertically integrated, having the capital to do both might not have been in the cards.
But a Small Business Administration 504 loan, financed through TMC Financing, made it possible for Green Acres to acquire its wholesale supplier, 162-acre Matsuda’s, with less cash up-front.
“The benefit to the borrower is it allows them to keep capital,” said Jim Azevedo, a senior vice president and business development officer with TMC. “The businesses getting these, a lot of them are in a growth cycle, and this allows future expansion.”
Azevedo said such loans are partnerships between banks and the SBA to give more businesses a boost, with only 10 percent required as a down payment. For banks, he said, the appeal is being in a first position to get repaid instead of the government agency. And because the business keeps more capital, it’s less likely to default on the loan.
TMC’s loan was $5 million, though the exact purchase price for Matsuda’s, on 10600 Florin Road in Sacramento, was not available. But there are already two direct benefits: All 150 Matsuda’s employees will stay on under Green Acres, and Green Acres can still move ahead with plans, approved late last month, for a new store in Elk Grove.
As well, Azevedo said, Green Acres is more vertically integrated with both a supply and retail side, and ownership of the nursery stays local.