At a glance
- Yakima Machine’s loan was a complex deal that faced significant financing challenges in the acquisition of a specialty zinc-plating and manual machining shop.
- Grow America’s innovative use of SBA 7(a) financing enabled the deal to successfully close while creating additional long-term financial benefits for the new owners.
- The solution means that a legacy business can continue employment for its team, and create fresh opportunities to build on a history of success.
When Yakima Machine owners Aaron Collier and Dorian Kensok sought financing to expand their established machine shop, they faced what seemed like insurmountable challenges. Today, thanks to innovative SBA 7(a) financing through Grow America, the husband-and-wife team is preserving a legacy and growing its capabilities as the new home of Yakima Machine.
Yakima Machine’s opportunity
As the former general manager of a machine shop, Aaron had wanted to strike out on his own, so he launched Yakima Machine from his garage. He and Dorian went all-in to get the shop off the ground, financially and otherwise. Among their offerings were custom-made, low-volume orders of complex parts in the aerospace, space, energy, science, and agricultural fields—the kinds of orders that other large-scale competitors turned away.
Yakima Machine established a strong following and quickly outgrew its space, which meant looking for a new location and expanding operations. Just 18 months after opening Yakima Machine, the owner of another well-established local machine shop, Multi Manufacturing, proposed selling the business to Aaron and Dorian.
The opportunity was perfect: The 5,000-square-foot shop was the region’s only provider of zinc-plated machine parts, which are crucial for the area’s agricultural industry. It had a small, dedicated, and experienced workforce, a loyal customer base, and its own commercial property. And in Dorian and Aaron, the seller recognized successors who would preserve and grow its reputation and retain its skilled employees.
Challenges to conventional commercial financing
Despite the business’s long history and clear future potential, traditional financing posed significant hurdles. Having invested their life savings into equipment and licensing for the original, garage-based Yakima Machine shop, Aaron and Dorian lacked the funds needed for a down payment (typically 20-25% or more) that banks require for business expansion.
The Grow America solution
The financing solution had to address multiple needs: purchasing the business, acquiring the building and equipment, and providing working capital. In response, Grow America crafted an innovative solution using an SBA 7(a) loan that included several unusual-but-eligible elements.
The previous owners worked with the Yakima Machine team and Grow America to meet the requirements of SBA financing—a strong vote of confidence in Yakima’s potential success. And because the commercial property represented more than 51% of the financing package, Aaron and Dorian qualified for a 25-year term instead of the standard 10-year term for business acquisitions, making payments more affordable for this significant and complex business deal.
Results and impact
The impact of Grow America’s financing solution is significant for both the business and the community. Aaron and Dorian retained all existing employees and plan to add more. They’ve maintained the shop’s specialized zinc-plating services while continuing to serve their niche mark, and added fabrication and welding to their offerings.
The business is also embracing modern marketing approaches, leveraging Dorian’s background in branding, which is significant for a machine shop and creates a competitive advantage. This combination of preserving traditional manufacturing capabilities while adopting contemporary business practices positions them well for future growth.
A deal with these complexities and challenges likely wouldn’t have been financed if it wasn’t for the creative solutions provided by the Grow America team. In addition, by supporting a veteran- and woman-owned small business in rural Washington State, this project perfectly aligns with Grow America’s mission.
Creative financing solutions to build and preserve small businesses
The success of the Yakima Machine deal demonstrates how creative financing solutions can preserve and grow vital local businesses. By leveraging the power of the SBA 7(a) loan program with seller financing and flexible terms, Grow America transformed what could have been the end of a legacy business into a new chapter of growth and innovation.
When small businesses face complex financing challenges, a lending partner with the right mix of experience, ingenuity, and flexibility is the answer. Use the form, below, to contact the team at Grow America to discuss your financing challenges today.