504 Refinance Case Study: Logistics One
Logistics One’s website proudly states that it is “a company built with an eye to the future,” a statement that well-captures the forward-looking approach the company’s founder, Bill McNeary has always taken.
The Saratoga Springs, NY-based warehousing, shipping, and transportation brokerage firm rests on a parcel of land that originally belonged to Bill’s grandparents. When Ball Manufacturing, the packaging and jar producer, established a plant next door, Bill saw a business opportunity in building storage for Ball’s overflow materials, specifically cans, and Logistics One’s warehousing business was born. Later, when Ball needed external resources to ship the cans out of the warehouse, he launched the shipping arm of the company. Today, Logistics One serves as a one-stop provider of warehousing, shipping, and transportation brokerage for dozens of manufacturers such as SCA Tissue and International Paper.
“Access to Capital Was Critical for Us”
Logistics One had more than 15 years of growth and profitable years under its belt when the recession hit in 2008. “We weren’t isolated from that economy,” says Robert Feldman, who serves as Logistics One’s Chief Operating Officer. The company experienced significant losses in 2010 and 2011 putting the stability of the business and more than 200 local jobs at risk.
Although business was tough at the time, the company continued to take a forward-looking approach to its future. A new customer had come on board and in order to accommodate the client, Logistics One needed to invest $1 million to make upgrades to its warehouse management system and purchase material handling equipment. Additionally, critical repairs were needed to warehouse buildings. “Access to capital became quickly critical for us,” says Robert. “The challenge with capital is that those who need it most have the most difficulty getting it. At the time, one of our local banks, who couldn’t help us with what we needed, introduced us to The 504 Company.”
Leveraging Owner Equity in Real Estate
Jim Conroy, SVP at The 504 Company, quickly realized that a 504 refinance would help Logistics One free up the working capital they needed to complete their project. At the time, the SBA 504 refinance was a temporary program available to help businesses through the recession. “Logistics One had equity in owner-occupied real estate that could be easily leveraged,” says Jim. “Refinancing their existing mortgage and paying off a factor using a 504 loan with a fixed and competitive 20-year rate ultimately lowered their monthly payments and allowed them to invest in the needed software and repairs.”
“We were really a ‘poster child’ for the 504 refinance program,” says Robert. “We hit hard times and just needed some liquidity to get things back on track. The service we received was outstanding,” he continues. “The 504 Company approached the project as a true business partner and took the time to learn about our situation. They made no guarantee other than they’d work hard to bring something to fruition and that’s what they did.”
Forward Thinking Paid Off
Today, business is again thriving for Logistics One. Revenue for the business has grown from $27 million in 2012 to $35 million in 2015. And, the customer that Logistics One brought on thanks to their loan with The 504 Company has remained a key account. Bills McNeary’s forward-thinking paid off, in part thanks to choosing to refinance with The 504 Company.