Saturday, October 31, 2009

Raising money in 2009: SacStarts

Going to check-out the SacStarts group on Sunday night:

"SacStarts dinners are informal get-togethers where the best and brightest technologists and entrepreneurs connect. Grab a seat and some food and meet other locals involved in Sacramento’s technology community."

Friday, October 23, 2009

Raising money in 2009: Strike One--Tri Counties Bank

I got a call yesterday from a rep at Tri Counties Bank. He had recently come in the week before and sat down with me regarding our needs. I sent him back with a full set of financials and an outline of our expansion plans. At the time, he seemed very positive on the outlook and indicated he would talk to his underwriting department as soon as possible.

I wasn't surprised when he called yesterday without positive news.

He said that the underwriter reviewed our information and that our expansion wasn't in line with "historical growth needs" but rather based on "accelerated needs" which the bank wasn't comfortable with. He indicated that our new opportunity for expansion was great for our business, but something that otherwise scares a lending institution because of the rapid and dramatic rise in the need for capital.

Rather than being open to $750-$850k in financing, he said the bank couldn't approach anything beyond $250k and that would have to be fully secured with collateral. He indicated even this would be a stretch for them. This was different than what he originally wrote in his email:

"We are often much more flexible than our larger counterparts. When we need outside guarantees we can turn to the SBA 504 program, or California Capital (like an SBA for the state of California)."

When I asked about these guarantees, none were volunteered or offered.

To be fair--he was very nice the entire time and I appreciated him coming to the office and sitting down with us the week prior.

I talked with an associate and she said she didn't think the story would be different with any of the other banks. "In this economy, you almost have to prove you don't need the money to actually get the money..."

We'll see...

Thursday, October 1, 2009

Raising money in 2009: Are banks lending to small business?

I am going to start a new topic here on the blog along the lines of small business development and funding.

Its always hard to run a small business. Right now, it can be really hard. But that doesn't stop owners from still trying to take on new challenges, establish new markets, and continue the pursuit of growth for their companies.

We're an example of that. I've run Silverado since 2003 as a fairly organic organization--we've generally bootstrapped most of what we do from the very beginning. We do a number of very high-profile things--and we do them very well.

First, we design high-definition editing systems for film, media, broadcast, and independent editors using Apple and Assimilate technology. One of our largest projects included redesigning the TV editing facility at NASA's Goddard Space Flight Center around Apple technology.

Another project includes high-end film finishing software. If you are planning to see Disney's "A Christmas Carol" in 3D later this year, that movie was finished on our editing systems using a product called SCRATCH from Assimilate.

Secondly, we've been at the forefront of helping to transform cinema production with the acquisition of two of the first RED ONE cameras in the world. The RED ONE can shoot in a format called 4K--which is akin to 35mm film grade material created digitally. It is actually a very green process since there is no film development, no chemicals, no processing, and no transporting material back and forth to labs.

We work on this 4K material in our new 5000 sq. foot Silverado Studios facility in Folsom which currently has one fully operational digital cinema editing suite along with two more edit suites and an advanced 4K digital cinema theater in development.

Did you see Lois Wolk's iPhone style-ad during the last election? Shot on our RED cameras and edited at Silverado.

Did you see Cathleen Galgiani's bullet train spots? Shot on our RED's and edited by Silverado personnel.

Our cameras and personnel have shot three full-length feature films including acting personnel such as Jennifer Love Hewitt, Jamie Kennedy, Robert Picardo, and Cybill Shepherd. Our studios also hosted the editorial of the critically acclaimed Timothy Hutton feature film "Broken Hill."

For better--and worse--we've worked pretty much with the existing cash flow of the business instead of taking venture capital, angel funding, or SBA loans. We've used our own resources plus those of a few family and friends along with a local bank for a small credit line which is no longer available.

Because of that, we've been restricted in growth to what we could accommodate on our own. In spite of those restrictions, we've been awarded the following accolades along the way:

2007 "100 Fastest Growing Companies in Sacramento" - Sacramento Business Journal
2008 "100 Fastest Growing Companies in Sacramento" - Sacramento Business Journal
2009 "100 Fastest Growing Companies in Sacramento" - Sacramento Business Journal

2008 "Top 5000 Fastest Growing Private Companies in America" - Inc. Magazine
2009 "Top 5000 Fastest Growing Private Companies in America" - Inc. Magazine

Presently, we're poised to take on a new project in the immediate future which will require outside funding for the first year. The details are under wraps right now (my competitors like to read my blog) but will come out fairly soon. The crux of the matter is that this project will take $850,000 in excess of what we currently have. This new operation will allow Silverado to become a $10M company in about 18 months.

With that in mind, I need a loan. But are banks lending?

My position is that they are not lending. But rather than hem-and-haw about the situation, I intend to determine for myself if banks aren't lending to small business.

The following banks will get a loan application from Silverado Systems, Inc. in the next two weeks:

Sierra Vista Bank
Folsom Lake Bank
First Northern Bank
IronStone Bank
Bank of America ($25,000,000,000 in TARP funding)
Wells Fargo Bank ($25,000,000,000 in TARP funding)
Five Star Bank
Umpqua Bank ($214,181,000 in TARP funding)
River City Bank
California Bank & Trust
California Federal Bank
Imperial Bank
Sacramento Commerce Bank
Sonoma National Bank
Western Sierra Bank
Mechanics Bank
Comerica Bank ($2,250,000,000 in TARP funding)
Tri Counties Bank
Stockmans Bank
American River Bank
Bridge Bank
First US Community Credit Union

Our criteria is the following:

1. We need a loan of $850,000 for a business expansion project that will significantly increase Silverado sales on a national basis.
2. We will move all deposit accounts to the loaning institution.
3. If such service is offered, we will move our credit card processing over to the loaning institution.

We will report the results from every single bank right here on this blog. Either "yay" or "nay."

This isn't designed to be antagonistic, but other business owners are in the same shoes as we are right now--trying to expand their business, but not having much luck getting funding. Plus, a lot of people want to know what is being done with their taxes. When a bank gets a bailout, are they loaning back to the community?

If there are any banks not listed that you think should get an app, please let me know. Our criteria for applying to a bank is whether they have a strong business loan track record.

Note--while this might be a noble experiment conducted for the benefit of ourselves and other Sacramento area small businesses, I am a businessman first. If a private investor walked in the door with $850,000, we'd proceed with our business project immediately. If you're in that position, I can always be reached at

However, private capital being in the condition that it is today--I don't know if that is plausible. So, we are proceeding with the traditional loan process.

If you are a lending institution that would like to be considered for an application, please contact us at (916) 760-0032.

Further--we'd love to accommodate a tour of our facility. Please call us and schedule a time to visit. We would love to show you around the studio and we can talk about our expansion plans in greater detail.

Stay tuned to this blog for the results.