For more than two years the small business community has struggled under a devastating Covid-19 pandemic which continues to pose a threat. Now a battered economy’s wobbly recovery has been stymied by rising inflation and interest rates, continued supply chain snags, ongoing international Covid restrictions and a war in Ukraine. It is into this continuously complex uncertainty that one lending startup has stepped up offering services that vulnerable businesses need the most -- direct access to financing transportation equipment and help navigating the ins and outs of business operations and regulatory red tape.
Acelera Financial Corp. was founded in 2019 in Los Angeles just a few months before the pandemic began its calamitous sweep. It aims to help fill the funding void experienced by many startups and small companies seeking equipment loans, particularly ventures owned by immigrants and people of color located in low to moderate-income California communities.
The corporation is a U.S. Treasury-designated Community Development Financial Institution (CDFI), essentially functioning as a privately-owned bank focused on providing credit and financial services to underserved markets. Acelera offers various loans ranging from $25,000 to $1 million, underwriting, loan closing and portfolio management, and assistance with entity formation, licensing and permits, Covid-19 adaptability options, among other services. The corporation also operates an affiliate entity that functions as a business incubator.
Acelera has originated or processed over $16 million in small business commercial loans since its inception. The corporation has a particular focus on the trucking industry which experienced significant growth in 2021 in numbers of trucking companies granted federal authorization to operate. Currently Acelera’s primary loan program, launched in 2021, provides loans to finance the purchase of freight trucks. “We project to originate over 150 truck loans in 2022,” said Chief Executive Officer Eric Sarabia, Esq. “Our main goals for the next several years include scaling our lending operations to finance over 1,000 trucks by 2025 and to automate our lending process and bring it completely online in order to simplify the user experience for our borrowers.”
In early 2021, Acelera was certified as a participating member lender with the California Infrastructure and Economic Development Bank, or IBank, a self-supporting institution created by the state legislature in 1994 to finance public infrastructure and private development toward helping build a strong economy. IBank, through seven financial development corporations including Small Business Development Corporation of Orange County, offers a state loan guarantee program to small businesses, effectively providing collateral for eligible business owners as they seek lending from banks and other financial institutions.
“Acelera wanted to become a participating member lender with IBank because the Small Business Loan Guarantee Program (SBLGP) sponsored by IBank provides us the additional support needed for us to increase our lending to the Latino and African-American small business community that we serve,” said Sarabia. “This designation supports our objective of providing critical access to capital to the small business owners that we serve by giving us the confidence to lend to those who are traditionally left out of the commercial loan market due to a perceived higher risk.”
Small Business Development Corporation has provided state loan guarantees to Acelera’s trucking clients since summer 2021. The greatest number of guarantees were issued during the third quarter ended March 31. During this timeframe, 21 guarantees totaling almost $1.6 million were issued which supported nearly $2 million in loans for trucking businesses.
Acelera’s focus on underserved markets and specifically the needs of Latino, African American, and immigrant business owners in low to moderate-income communities derives from its founders’ personal experiences and insights. The organization’s seven partners originate from Colombia, the Dominican Republic, Mexico, and El Salvador and have held careers in law, finance, marketing, and executive leadership. Said Sarabia, “We observed that many small business owners needed affordable commercial loans of less than $250,000 to either refinance predatory loans or to meet working capital needs to fulfill reliable customer contracts.”
The company connects with is clientele through the founders’ networks, direct interaction with business owners at their locations, hosting or participating in online and in-person workshops, and through partnerships or collaborations with other organizations.
Meanwhile, Acelera’s leadership hopes additional lenders will broaden their financing opportunities to encompass the needs of vulnerable small businesses. “Despite recent pledges, large banks continue to reduce the number of commercial loans of $250,000 and below to small businesses, so this small business community will still face challenges with access to capital,” Sarabia said. “We plan on continuing to fill the void, but the need is so large that it will require many more lenders and/or government support.”
