Frank Gallegos, Executive Director of Cen Cal Business Finance Group, has guided the organization through rapid growth, expanding its loan portfolio to $232.6 million with 530 loans at the end of March.Photo credit: Frank Gallegos
As banks across the country consolidate and expand, with JPMorgan Chase & Co. and PNC Bank planning to add branches, one local corporate lender is also expanding its footprint.
Fresno-based Cen Cal Business Finance Group has merged with Coastal Business Finance of Santa Maria and acquired Bakersfield-based Mid State Development Corporation. Expanding into these new locations will allow Cen Cal to take advantage of the Small Business Administration's guaranteed financing products, providing both communities with a strong partner for business growth.
As of December 1, 2023, Mid-State has 191 total loans for $71.3 million and Cen Cal has 336 total loans for $160.7 million. As of March 30, Cen Cal's loan portfolio had a combined loan balance of $232.6 million and 530 loans.
“The experience we have gained at Cen Cal will help grow business in both communities not only this year but for decades to come,” said Cen Cal Board Chairman Tal Cloud. “This is going to be a great partnership, and we’re excited about what we can offer these communities and help them grow their small businesses.”
local team
Cen Cal Business Finance Group will be the surviving Certified Development Company (CDC) and will be headquartered in Fresno. Cen Cal's Bakersfield office will be housed in the former Mid-State Development Office, and all employees from both organizations will remain.
Bakersfield has added Lisa Carvajal as senior loan officer and principal business development officer. Carvajal is a Bakersfield native with more than 25 years of experience in banking and financial operations. Carvajal will represent Kern County, southern Tulare County, desert areas, and Sen Cal in northern Los Angeles County.
The Santa Maria/Coast office has added Leslie Lang Lopez as senior director of lending and business development. Lang-Lopez is a Central Coast resident and a two-time graduate of Fresno State University. Lang-Lopez will represent San Luis Obispo, Santa Barbara, Monterey, Ventura counties and coastal Los Angeles counties.
“They will have someone in their community lend money to small businesses that are the heart of the community in each of our two expansion counties and the surrounding counties,” Cloud said.
chance knock
Frank Gallegos, executive director of St. Cal, said both the Bakersfield and Santa Maria executive directors are retiring. It was difficult for Cen Cal to find people with the skillset to handle not only the financing side, but also sales and office management. Two gentlemen had left the company, and the companies searched for six to nine months but were unable to find financially viable candidates. This allowed Cen Cal to ask to expand and maintain a local presence.
Cen Cal absorbs administrative and administrative costs, benefits from economies of scale, and allows these businesses to be managed by companies that already know the market and talent.
Cen Cal already lends money along the coast and has been active in San Luis Obispo County for the past nine years. Many people in this valley who know the market well have vacation homes or other locations for their businesses along the coast.
In the Fresno office, Cal Cain will continue as Director of Loans and Key Business Development. Cain is a Fresno native, graduate of Fresno State University, and has 35 years of banking and finance experience. He has been with Cen Cal for nearly 10 years and will continue to represent Cen Cal throughout the Valley from Visalia to Sacramento.
Three Mid-State board members will be added to Cen Cal's board, and a newly formed non-voting Bakersfield Advisory Board will support community opportunities and awareness.
SBA 504 Lender
Founded in 1984, Cen Cal partners with banks, private lenders, and credit unions to provide small and medium-sized businesses throughout California's Central Valley and Central California Coast with fixed-term financing for owner-occupied real estate acquisitions and equipment purchases. We offer interest rate SBA 504 loans.
Along with Mid-State, these two organizations are long-standing private nonprofit organizations with a collective economic development mission in their respective communities. The U.S. Small Business Administration has licensed both companies as community development corporations to offer the SBA 504 loan program.
“As a 504 loan recipient myself, and many of us also board members, I joined this program because I saw the benefits. As board chair, I got the same benefits. I'm really excited to be able to provide that opportunity to others,” Cloud said.
With the merger of Mid State and Cen Cal, the SBA 504 loan program will continue. Local businesses will also have continued direct access to a number of his SBA programs through regional CDCs that will be located within their communities.
How to use
For Cen Cal SBA 504 loans, the partner bank is expected to provide 50% of the transaction, Cen Cal will cover 40%, and the borrower will cover the remainder. Cent Cal's portion is fixed.
“So when you think about derivative financing, you can fix the allowed part and let that part float, giving you the peace of mind that you have a fixed payment for your part of the loan,” Gallegos said. said.
The term of the loan is 25 years. Cen Cal is fixed for the life of the loan, and the bank's share can be variable, fixed, or similar.
As with FHA mortgage loans, first-time buyers usually have a smaller down payment. You can get a great blend of interest rates, and while the fees may be a little higher, they're still very affordable, just like FHA loans and conventional loans. The higher the loan percentage and the longer the term, the more reasonable the interest rate.
The majority of Cent Cal's transactions originate with banks. They let them know what's available, what they're looking for, and allow them to do business with any bank in California. They primarily work with banks that have branches in the Valley.
“We put a lot of effort into letting them know what we can do, and our application is very similar to banking. Probably a good half of them started in banking and went on to some form of So they're starting with us,” Gallegos said.
The organization's roots are in the Valley, with a strong intermediary network that includes Economic Development Corporations and other nonprofit economic development agencies around the Valley. Gallegos said he gets a lot of visits, especially from brokers he knows can help small businesses close deals.
current trends
Cen Cal also works with Access Plus Capital, other nonprofit organizations, and credit unions to provide financing. Gallegos said credit unions are playing a more important role in business financing loans.
Typical projects range from a $500,000 purchase to perhaps $4-5 million. Some projects can reach $20 million, and Cen Cal's share can reach $5 million. The most common deals are around $1 million.
Cen Cal has new plans, including the launch of a microloan program to expand support to currently underserved communities.
“The new loan fund will be a fully privately funded revolving loan fund for existing Bakersfield small businesses. Loans range from $10,000 to $25,000 and can be used for equipment, working capital, and inventory. We plan to hire local college interns to work with customers to process loans and hope to launch the program by the end of the year,” Gallegos said.
