Heritage Solutions taps TMC for real estate and equipment financing
Heritage Solutions has a simple mission: to search out customer needs and meet them in a superior way. That attitude of collaborative exploration has brought Heritage to the forefront of a growing custom-packaging industry.
From humble beginnings in 1983 as a distribution company for the moving and storage industry, Heritage soon recognized an unmet need for quality corrugated boxes.
“The big guys have failed to service the market for corrugated,” says owner, Owner John Tatum. “They just did it to get rid of the paper from their mills. There was no service, graphics or quality.”
In 1999, Tatum bought into a corrugated sheet producer named Cal Sheets. In 2008, he added a division that produced high quality boxes with digital printing.
“We do a lot of business with food, wine and beer industries, where product packaging matters,” Tatum said. “Flowers are just flowers until you put them in a box. We can now customize the box for weddings, holidays, and even personalize it with names.”
To take Heritage’s custom packaging capabilities further, Tatum bought a woodworking shop, ICON Design, that specializes in permanent wooden displays and boxes. “We do a lot in the wine industry and this will allow us to do even more,” Tatum said.
Heritage has two SBA 504 loans from TMC
The first loan allowed the purchase of the 230,000-square-foot fulfillment warehouse they had been leasing in Lathrop, California. “In manufacturing operations, you’re going to have TIs [tenant improvements], which means you have to invest in the building. For example, we do a lot of fulfillment for winemakers. To do that, we need a temperature-controlled facility, or we would ruin their wine. You can’t do their business if you don’t have it. And you can’t do that in a rental building,” Tatum explained. “Without the SBA program and TMC, we would not be growing our business and improving our bottom line.”
The second SBA 504 loan was equipment-only: $7.2 million for a Göpfert precision printer from Germany. “It allows us to do direct print flexo,” Tatum said, “and get the quality of litho with flexo speed.”
Tatum credits Heritage’s success in part to the availability of SBA 504 financing. “Much of what we’ve been able to grow has been because we own our own building,” he said. “For ICON, we needed a paint room so particles and fumes wouldn’t get all over the building. We also made a cutting room to contain the dust. You have to be able to do the things you need to do to be a better company and that’s hard if it’s not your building.
“Without SBA help,” Tatum said, “we couldn’t afford to buy this equipment. This is the best printing machine in the country and no one else has it but us. Without the SBA and the ability to finance over 20 years, I would have been too scared. If we had to finance the machine over five to seven years like most loans, I don’t think we could have done it.”
Tatum keeps a close eye on cash flow. “Not having to put a largedown payment down to buy this real estate really makes a difference. You can keep cash to do other things,” he said. “For example, we bought ICON for $3 million in the middle of the $7 million purchase for equipment. The opportunity came up and it was a perfect fit for us. We couldn’t have done that without the SBA program and TMC.
“Today we are in line for a $6-million order. It’s an old-fashioned beer crate and without ICON and our woodshop in our own building we would not been considered capable of doing the job,” he said. “Without the SBA program and TMC, we would not be growing our business and improving our bottom line.”