Small Firms Will Get Help to Expand, Thanks to New County Program

Thanks to cheap bond money available through a Los Angeles County program, Vernon-based Sun Products is building a factory, buying new equipment and will be nearly doubling the number of people it employs to manufacture aluminum outdoor furniture.

The work force at Sun Products, which also imports oak indoor furniture, now fluctuates between 40 and 120 people scattered among several locations in Vernon, a company spokesman said. “This will make us more efficient” because the company will be able to consolidate its operations with the $3.4 million in bond money it will receive, he said.

Sun Products is one of 21 companies participating in a $31-million industrial development bond offering by the Industrial Development Authority of the County of Los Angeles designed to help local small businesses expand and increase their employment.

The tax-exempt bonds, scheduled to be issued in mid-December, allow small companies to pool their borrowing needs and get a low interest rate, said Ted Howard, president of the county’s Economic Development Corp., which helped put together the bond issue. The participating businesses will be paying an average interest rate of 6.5% for their money, plus 7 1/2 to 8 points as an up-front loan fee to cover issuance costs, compared to a market rate of about 11.5% to 12%, Howard said. Each point is equivalent to 1% of the loan’s principal amount.

The 21 companies are borrowing between $450,000 and $3.4 million each and together will create more than 1,000 jobs. To participate, companies must have annual sales of at least $3 million, must be at least four years old and must have a higher-than-average growth rate for the region.

And each firm must hire new employees as a result of its expansion, Howard said. “We really looked for some public benefit to be derived from these investments . . . so we looked primarily to job creation,” he said.

The offering is the first composite industrial development bond issue for small business in Los Angeles and is the largest ever offered nationwide, Howard said. No public funds or guarantees are involved in the offering, he said. The bonds are to be repaid from the borrowers’ revenues and are backed by bank letters of credit.

The Economic Development Corp. will hold public hearings on Thursday on the applying companies, and the California Industrial Development Finance Advisory Committee is scheduled to approve the companies on Friday.

The bond issue was structured and developed by a consortium headed by Developing Systems Ltd., a Washington-based financial and economic consulting firm.

The Economic Development Corp. has identified 60 companies that are interested in participating in an industrial development bond offering that the county hopes to make early next year, Howard said.