CenFed of Pasadena Buys Government Funding Corp.

Government Funding Corp., one of Southern California’s leading Small Business Administration lenders, was sold Thursday to Pasadena-based CenFed Financial Corp. for $90 million in cash, according to Sidney Moray, chief executive of Government Funding.

Government Funding, owned outright by Moray and his family, has originated nearly $1 billion of SBA-guaranteed loans to California small businesses since Moray founded it 15 years ago.

Moray, 71, a former retailer and manufacturer, came out of retirement to start the company in 1979 and had no expectations of staying with it this long. “I started fooling around with it, and it just grew like Topsy,” he said in a telephone interview.

The company currently has a servicing portfolio of $360 million, which Moray said is the largest SBA-loan portfolio in Southern California. Its leading competitor in Southern California is the Money Store, a top SBA lender nationally.

The sale came after two and a half months of negotiations with CenFed and other bidders, including the Money Store and divisions of AT&T; and ITT Corp., Moray said.

CenFed was not the highest bidder but was best able to get the deal done quickly, he added. Moray, who had set a June 30 target date for completing the sale, beat the deadline by closing the deal on Thursday afternoon.

Moray said he decided to sell because, as a private company, Government Funding lacked access to the capital it needed to keep growing and because he was getting tired of SBA regulation.

“We’re pretty entrepreneurial here, and the regulatory agencies were driving us up a wall,” he said.

Besides its Hollywood headquarters, Government Funding has offices in San Diego, Orange, Riverside and Ventura counties, as well as in Northern California. It has a staff of about 40, most of whom will remain with the firm as it becomes a division of CenFed, Moray said.