At a glance
- Crescent Lighting Supply was in a growth phase which made it difficult to qualify for traditional commercial financing.
- The owners’ character and business experience factored heavily in Grow America’s ability to use SBA 7(a) financing which allowed Crescent to expand even further.
- This solution created an immediate increase in the company’s value and helped retain existing jobs and create 10 full-time positions.
After expanding Crescent Lighting Supply to be one of the largest lighting distributors in Washington state, Grant Jones and the Crescent ownership group, which includes his father Hugh Jones and brother Kyle Jones, wanted to continue their growth by purchasing the largest lighting distributor in Arizona. When their finances didn’t fit into traditional loan requirements, their character and experience set them up to qualify for an SBA 7(a) loan from Grow America.
Crescent Lighting Supply’s opportunity
After selling a family business in 2014, Grant, Hugh, and Kyle were eager to build another company. In 2021, they bought Crescent Lighting Supply, and within three years, they had acquired two additional showrooms and built a third. As a result, Crescent became one of the largest residential lighting distributors in the Pacific Northwest.
To continue their growth, the Joneses decided to purchase Aztec, a lighting distributor in Phoenix, Arizona. They were excited about this opportunity because there was already synergy between Crescent and Aztec. They worked with the same suppliers and had a similar client base. In addition Aztec was a long-standing lighting distributor in Phoenix, so they had built-in clients and employees that would stay on after the purchase.
Challenges to conventional commercial financing
Despite the capital from selling their previous business and strong personal finances, Grant and Hugh were in growth mode and didn’t have collateral that the banks required in order to approve a loan. They knew purchasing Aztec would set them up for success, but they also knew that it came with some complexities that made traditional lending difficult.
First, the distribution center that they wanted to purchase was in Arizona, well outside of their local bank’s lending radius. Second, there was a gap between the funding they needed and the collateral they had. Both of these things made for a higher risk loan that the banks weren’t able to bet on.
The company had been working on finding funding for the purchase for at least a year before they were referred to Brian Salva, a lending manager with Grow America. When Grow America got involved, things started to look up.
Brian explained, “Grant and Hugh were turned down from multiple banks before they found Grow America. Ideally for them they would have loved to do a loan with a bank and have their entire relationship with a bank, their deposits, their line of credit. They just weren’t there, so we were able to give them a second look.”
Grow America’s solution
Based on the collateral that Grant and Hugh did have as well as the revenue projections based on the Aztec purchase, Grow America was able to approve a SBA 7(a) loan for Crescent.
Brian emphasized Grant, Kyle and Hugh’s character and experience owning and running a business and how that created confidence in granting the loan. Their commitment to Crescent was clear and with the collateral that they were able to provide and the guarantees that come with an SBA loan, Grow America was able to support the deal.
Results and impact
With the SBA 7(a) loan from Grow America, Crescent moved forward with their purchase of Aztec. Their larger size meant that they were soon eligible for better pricing from their manufacturers, allowing them to leverage volume discounts and quickly increase the company’s value.
Another immediate impact was that the existing employees at the Phoenix location kept their jobs and the company added 10 more full time positions. Because this new location was in a low-income census tract, the job creation also aligned with the part of Grow America’s mission that supports low-income communities.
Looking toward the future to create opportunities
Grow America is able to help those who fall outside the sphere of what banks are able to do. While we value the numbers on paper, we also value character and experience more than a traditional bank is able to.
Grow America takes past financials into account, but we also look forward. In the case of Crescent, Brian says, “We were able to project what this might look like if these two companies combined, and we were massively comfortable with the projections that they provided.”
For those projects and companies that fall outside the scope of traditional lending, referring a client to Grow American can allow them to achieve their goals. Our team works to find creative solutions to complex financing challenges.