Valley Lender Makes Call at Bay Area Companies

It’s the age of Aquaria for the Valley Economic Development Center. The Sherman Oaks small business lender has taken its successful model of lending to minority- and women-owned small businesses in Los Angeles on a national scale. San Francisco is the latest city where the VEDC is making loans in the amount of $50,000 to $500,000, focusing on low- to moderate-income areas. Next up, said VEDC President Roberto Barragan, is New York, New Jersey and Connecticut. The East Coast is of particular importance because of the high concentration of entrepreneurs and small businesses, Barragan said. “For a small business loan product there are few providers and fewer who focus on women and minority (businesses),” he added. To make the loan program relevant to areas outside Los Angeles, the VEDC needed to come up with a new name. After all, VEDC means nothing to business owners in Chicago and Las Vegas, two other cities where center makes loans. So was born Aquaria Funds. The VEDC has already done about $4 million in lending in the San Francisco area out of about $12 million statewide. What is different about the Aquaria program are the amounts being loaned and the businesses using the money for working capital, equipment purchases, tenant improvements and debt refinancing. The loan recipients also need to show some job creation. The largest nonprofit business development organization in the greater Los Angeles region, VEDC has a portfolio of about 500 active loans worth $30 million. It typically loans between $1 million and $1.5 million to businesses every month. Growing the portfolio depends on the VEDC not losing money on its loans even when the recipient would be a risk to a traditional lender like a bank, Barragan said. The Aquaria Fund targets such risky businesses – those still recovering from the recession or struggling with cash flow but still with a good business plan. Often, the loan is not backed by the U.S. Small Business Administration, Barragan said. The supply of small business loans just isn’t that large, which makes the VEDC a popular alternative. And the center does it at market rates unlike other lenders charging astronomical interest rates in the 30 percent range. “That is just criminal,” Barragan said. “None of our small business loans go above 8 percent.” The adding of the Aquaria program in San Francisco is part of a larger strategy by the VEDC to become a national organization. The center has a one-employee office in Fresno and has two employees in San Francisco. It also opened a one-employee outpost operating from a chamber of commerce office in Chicago. In January, the VEDC acquired the Nevada Microenterprise Initiative, a small lending nonprofit in Henderson, Nev. Enhanced Interest The low interest rates on bond investments are not going to last forever, so investors need to prepare their portfolio now. That’s the advice of Craig Chiate, a private wealth advisor with Merrill Lynch, the wealth management division of Bank of America Corp., in Charlotte, N.C. Investors should maintain a portfolio with a payout time of about 3.5 years in high-quality municipal bonds, said Chiate, a Calabasas resident. “They should reduce or eliminate any open-ended bond funds with intermediate durations that will not do well in a rising interest rate environment,” he said. Bond trading had once been limited to more sophisticated investors who understood the ins and outs of the different types of bonds (government, municipal and corporate) and the length of time to invest in them. The recession changed that and bonds moved into the mainstream as investors re-evaluated their portfolios and saw bonds as a safe asset class, Chiate said. The challenge with fixed-income investments such as bonds is that interest rates can only go so low and then will begin to rise, causing the bonds to lose value. Another factor affecting the bond market are actions taken by the Federal Reserve, Chiate said. The market has been enhanced by the Fed purchasing fixed-income assets in the range of $85 billion a month, but has indicated that at some point in the next 12 months to 18 months will finish its bond purchases, Chiate said. Mortgage Matchmaker Martha Solis has joined the consumer lending team of Union Bank as a community loan officer based in Ventura County. Solis will cover an area that includes working with clients in Camarillo to Moorpark. Among her duties are matching low- and moderate-income clients with the bank’s economic opportunity mortgage product for purchasing or refinancing a home. Prior to joining Union Bank, Solis was a vice president, senior mortgage officer and branch manager for Bank of America. “With Martha’s client focus and extensive experience, we are confident that we will continue to expand our business,” said Vice President and Regional Sales Manager Michael McCormick in a prepared statement. Staff Reporter Mark R. Madler can be reached at (818) 316-3126 or [email protected]