Trek store highlights benefits of alternative financing options

[caption id="attachment_16386" align="alignright" width="259" caption="Bret Gave, owner of Trek bicycle store in Santa Rosa"][/caption]

NORTH BAY – With credit hard to come by these days, many businesses have had to go to sources other than banks for money. Some go to companies like Warren Capital, Bay Sierra Mortgage and venture capital groups like the North Bay Angels.

The loan arranged to open the Trek bicycle store in Santa Rosa on a rainy February morning this year is part of a growing trend in alternative financing.

The store opened the day the Amgen Tour of California came through Napa and Sonoma counties, ending in Santa Rosa, after months of effort went into getting the nationally recognized brand to Santa Rosa.

When Bret Gave, an employee of Trek for seven years, decided he wanted to open a store dedicated to the sale of mostly Trek merchandise, he decided to look into the company's loan program instead of going for a more traditional bank loan.

He had been the general manager of corporately owned stores, where he said he was forced to look at an industry based on enthusiasm and deal with it from a business point of view.

Trek is a family-owned company with distributers in several thousand stores all over the country. There are roughly 100 “concept stores” owned by individuals that have agreements with Trek as to the percentage of Trek merchandise they sell.

Mr. Gave knew that Trek would occasionally make loans to people interested in putting together stores, so he wrote a business plan and presented it to the company. It had seven or so markets it was interested in expanding to, and he chose Santa Rosa.

Going for the loan through Trek instead of a bank gives him support he would not ordinarily get, he said. He has a line of credit with it, and it financed the inventory. And it is a guarantor on the lease.

He said he could have gotten a lot more money from a traditional bank loan.

“They are in it with me until the bitter end, “Mr. Gave said.

This somewhat innovative way for a business to expand its market share has helped out Mr. Gave. There are, however, a number of alternatives to banks out there. This type of lending serves the many real estate loans that do not conform to bank and savings loan standards.

Warren Capital Corp. has been around for 25 years and has completed more than 3,000 transactions for a total transaction value in excess of $1.5 billion, $400 million here in the North Bay.

Clay Stephens, founder and chief executive officer of Warren Capital, said there has been a shift in lending in the last 30 years. In 1978, he said, non-bank lenders had only 29 percent of the loan market while commercial banks had 71 percent.

In 2008, however, the commercial bank share had dropped to 35 percent, and non-bank lenders were up to 65 percent.

Non-bank lenders offer equipment finance and vendor sales financing, and they work with traditional bank lenders and offer corporate finance. However, they do not offer unsecured lines of credit, construction loans or consumer loans.

Bay Sierra specializes in private money lending and private borrower loan services for California real estate. A private money loan is funded by private individuals, IRAs and pension plans. The property's equity and value provide the private lender a potentially lower risk than other types of investments with returns usually ranging between 10 percent and 13 percent.

The North Bay Angels is a group that has put money up for entrepreneurial ventures for people in the tech industry.

The vision of the Angels is to provide a forum for successful North Bay investors to meet entrepreneurs who have developed innovative concepts, products, services or projects that need investment capital and mentoring to flourish and grow.

Their primary goal is to promote the growth of local emerging companies that have promise to become large, successful enterprises and employers.