Dear friends, stakeholders, and supporters:

As we moved into our fiscal third quarter at the beginning of 2022, the latest Covid-19 variant spike gradually subsided only to be replaced by new crises – a devastating war in Ukraine and a surge in inflation and fuel costs. We are privileged to provide California’s small businesses with continued support in the face of these sea changes and help them explore new possibilities that emerge from the chaos, including current opportunities within the expanding logistics sector.

Small Business Development Corporation of Orange County (SBDC-OC) is one of seven Financial Development Corporations that operate under the state’s Small Business Finance Center and administer loan guarantee programs that help small businesses obtain financing from lenders. The programs are focused particularly on businesses in low-to-moderate-income communities. During the pandemic, strategies to assist have included a Covid-19 Microloan Guarantee initiative which has resulted in the creation or retention of more than 10,000 jobs. 

As California moves forward in its recovery this year and as fewer Covid-19 relief loan guarantees are needed, SBDC-OC has pivoted its services to assist small business operators in the trucking industry. The pandemic produced a significant increase in online sales and the trucking sector experienced a corresponding explosion in growth. For details, please see the excellent piece in this newsletter by our loan committee chair Jim Ely.

During the third quarter ended March 31, 2022, half of SBDC-OC’s 43 loan guarantees supported loans made by Los Angeles-based Acelera Financial Corp. for general long distance freight trucking enterprises. Acelera, a company profiled in this newsletter, is a newcomer to the lending industry and is uniquely focused on providing financing to trucking ventures. We were excited to see Acelera certified last year as a participating member institution of the California Infrastructure and Economic Development Bank (IBank) under which the Small Business Finance Center and all of our Financial Development Corporations operate.

In spite of the hurdles the future remains bright – we are encouraged by reports such as a forecast issued in March from the UCLA Anderson School of Management which predicts in the latter half of this year there will be an increase in oil production in the U.S. and by foreign suppliers that will reduce fuel prices and result in a “check on inflation.” This same report notes three California sectors – technology, logistics and construction -- that are expected to be “strong drivers of the California economy in both the short and long term.”

As the manager of IBank’s Small Business Finance Center noted in an annual report letter, small businesses account for more than 83% of new jobs in California and represent 99.8% of all businesses in the state. Our work is vital and we remain at the ready to carry out initiatives and to use our own creativity in meeting the needs of our small business community during these tumultuous, opportune times. We thank you for your continued assistance in achieving this mission.

Michael A. Ocasio
President / CEO

Jim’s Spot

Trucking serves as a barometer of the U.S. economy, representing 72.5% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.23 billion tons of freight in 2020.

Motor carriers collected $732.3 billion. This roughly ¾ of a trillion dollars is a big part of the economy.   Yet, the trucking industry is one of the most fragmented ones in the U.S. There are almost 4 million class 8 trucks in operation. According to the U.S. Department of Transportation, as of February 2021, the number of for-hire carriers on file with the Federal Motor Carrier Safety Administration totaled 996,894.  97.4% operate fewer than 20 trucks. Most are single truck owner-operators.

Recently there’s been a virtual explosion in the number of trucking companies receiving authority to operate as granted by the Federal Motor Carrier Safety Administration (FMCSA). 109,340 trucking companies opened for business in 2021. That’s 50,202 more than 2020 (59,538) and 65,787 more than 2018 (43,953).

In the last year numerous trucking companies have opened thanks to an innovative loan guarantee product pioneered by the Small Business Development Corporation of Orange County.

Utilizing a delegated approval authority, turn-around on guarantee loan approvals is almost immediate. Applicants typically have at least 2 years of trucking experience and can put down about 10%. The loan can be fully amortized over the estimated useful life of the truck, typically being 5 years. Lender will typically require a GPS monitoring tracker be placed on the truck. Average loan amount has been $100,000.

So far, over 50 loans totaling roughly $5,000,000 have been provided to borrowers who have either been a Latino, African American or woman owned small business.

Jim Ely
Chairman, Loan Committee

Lender Spotlight

In the Community

Success Stories

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