“My advice? Find your SBA lending partner first. TMC is the reason this project came to fruition and we couldn’t be happier with the result,” says Armen Alajian. Along with his brother, Vod, they’re second-generation owners of ARTO – a Southern California-based, high-end specialty tile and brick design and manufacturing business started by their father, Arto Alajian, in 1966.
Here’s why they chose the SBA 504 loan program with financing from TMC for their business’s expansion into Tucson, Arizona. 
A lasting focus on design and quality
Arto Alajian’s personal and professional journey took him from his birthplace, Egypt, and many other parts of the world before he made southern California as his home. There, as a side business, he launched ARTO Brick with a straightforward goal: To produce the highest-quality brick products possible, using centuries-old techniques and locally sourced materials, created by the finest craftspeople he could find and train.
The product line started with thin, light-weight brick veneers with an “old world” design aesthetic and today, ARTO’s offerings include ceramic and concrete tile, carved stone, porcelain, clay, and more. The products are still produced at the company’s three buildings on the Gardena, CA, campus, which also includes distribution, administrative offices, and a showroom.
Armen explains, “Most of our work is custom-developed for our clients, who include high-end hotels and spas, restaurants, and estates, and we’d like to add even more options, like glass and leather. We’re always challenging ourselves and our team to be innovative and creative.”
A need for additional space leads to a Tucson expansion
Armen and Vod had been involved with the business for years before their father passed away in 2014. Their vision for further growth led to a need for additional space.
“We’d expanded as much as we could within our Gardena site, which will always be our home base,” Armen says. “We needed a lot of square footage to meet demand and space is very limited and very expensive in Southern California, so we started to look elsewhere.”
Their search included Mexico, Nevada, and the Phoenix area, but Armen and Vod chose Tucson because it offered the physical space they needed in a community that appreciates the arts, design, and handcrafted products.
“Tucson felt exactly right for ARTO,” Armen says.
An SBA 504 loan means cash is conserved
Armen was familiar with SBA 504 loans when the opportunity arose to purchase the property at 3430 East 36th Street with an existing facility of nearly 130,000 square feet.
“We’d used the SBA 504 loan program for two of our other properties,” he says, “so we knew that there was nothing better. You can’t beat a program that enables you to put just 10% down. It means we can keep more cash on hand to get operations underway.”
SBA 504 loans are made in partnership between the business owner, a certified development company (CDC), like TMC, and a bank. For most deals, the business owner contributes a 10% down payment (some particular projects may require 15%), the bank typically lends 50%, and the SBA 504 portion is 40%. For the ARTO acquisition, this meant a down payment of about $867,000 for the total project cost of $8,667,865 – a significant difference from the 30-40% down that conventional commercial mortgages require.
In addition to preserving working capital for future investment, the SBA 504 offers long-term, fixed-rate financing, which means that ARTO’s Tucson location has predictable occupancy costs for the 25 years of the SBA 504 term. This is particularly important for a capital-intensive manufacturing business acquiring a large industrial asset – and with a goal to hire more staff.
“Right now, ARTO has about 85 employees and we’re looking to double as growth continues,” Armen explains.
An experienced team in TMC
SVP, Business Development
“Our real estate broker recommended a bank and that bank recommended TMC. That’s how we first connected with Dean,” Armen says about meeting TMC SVP Dean Aloe. “As the loan process was underway, some obstacles unrelated to our deal arose for the bank, and that became a major setback for us,” Armen says. “This could have totally derailed the acquisition.”
Instead, Armen says, “Dean was spectacular! He did everything necessary to get this right back on track and gave us confidence that it would all work out – and it did. I can’t say enough about how impressed I am by Dean and how amazing he and the TMC team were throughout, and especially when challenges arose. It’s clear that experience matters.”
About the project, Dean adds, “Armen was a pleasure to work with, even during some significant challenges – and I think that those are the kinds of situations in which TMC’s experience really shines. It’s why I never doubted that we would make this work for ARTO.”
A family business, a growing team, and TMC
“Many people have made ARTO the globally respected company that it is today, beginning with our father and our incredible employees. And our success wouldn’t have happened without the support of our wives – my wife, Sally, and Vod’s wife, Solange. They put everything into helping us make this work,” Armen admits. Now, too, a third generation of Alajians is learning the business – Armen’s and Vod’s sons.
Armen continues, “And now Dean and TMC are a part of our team. I can’t say enough about how important that is. That’s why I say that if you want to use an SBA 504 loan for your project, find the best CDC lender in your area first – it’s essential. And if your business is in TMC’s area, just give them a call. Dean and TMC are the reasons that this project came to a successful end.”
If you’d like to learn more about buying owner-occupied commercial real estate for your small business, TMC can help. To learn more, contact us today.
Acerca de la financiación de TMC
Financiamiento TMC is a nonprofit 501(c)(4) Certified Development Company (CDC) with a mission to promote economic development and job creation by helping small businesses access affordable financing. Since its founding in 1981, TMC has provided approximately $16 billion in SBA 504 commercial real estate financing to over 8,000 small businesses across Arizona, California, Hawaii, Nevada, and Oregon. These efforts have helped create more than 63,000 jobs. TMC is recognized as the #1 SBA 504 lender in the nation, offering long-term, fixed-rate financing that empowers small business owners to purchase, construct or refinance real estate and major fixed assets to grow their operations.