Fresno-based lender set to acquire Bakersfield’s Mid State Development
A Bakersfield-based business lender announced Monday it expects to be acquired soon by a similar but much larger organization based in Fresno.
Mid State Development Corp. said it hopes to receive approval next month from the U.S. Small Business Administration to become part of Fresno’s Cen Cal Business Finance Group, which with $160.7 million in loans is one and a quarter times larger than the Bakersfield organization.
Cen Cal’s name will replace that of Mid State in Bakersfield, according to a news release the two nonprofits issued Monday. It said all employees of both organizations will remain in place, with the exception of Mid State President Keith Brice, who plans to retire when the acquisition is finalized. Brice announced last spring that he was planning to step down at the end of this year after 24 years with the company.
Both organizations are known as certified development companies. They offer loans guaranteed by the U.S. Small Business Administration for enterprises trying to expand or are otherwise looking for real estate in which they plan to operate. They issues bonds called debentures, usually with a term of 10 to 25 years, secured by a second trust deed that gets sold to institutional investors.
Brice said in April that Mid State’s loan portfolio had shrunk from more than $100 million in 2018 to about $80 million because of changing conditions and, more recently, limited opportunities related to recently higher interest rates, inflation and a tight supply of properties for purchase by owner-occupants. Monday’s release pegged Mid State’s portfolio at 191 loans totaling $71.3 million.
Fresno SBA Director Dawn Golik said in the release that both organizations have helped San Joaquin Valley and Central Coast small businesses retain thousands of jobs.
“Their merger will create even more opportunities for this region’s small businesses to access the capital they need to start up, scale up and succeed,” Golik stated. “The merger ensures local businesses will have ongoing direct access to a host of Small Business Administration programs through what will now be a regional CDC located within the community.”
Cen Cal Executive Director Frank Gallegos said in Monday’s release that the plans call for launching a micro-loan program extending help to communities not presently served by either organization.
“The new loan fund will be a completely privately funded revolving loan fund for existing Bakersfield small businesses. Loans will range from $10,000 to $25,000 and can be used for equipment, working capital (or) inventory,” Gallegos stated. “We plan to hire local college interns to help work with clients to process the loans.”
Three members of Mid State’s board will join that of Cen Cal, the release said. It noted that a non-voting Bakersfield advisory board will be created to “assist with community opportunities and awareness.”
Mid State Chairman Anthony Olivieri stated he and executive Deanna Blaise at Bakersfield-based Valley Strong Credit Union, along with another board member from Mid State, will join have a seat and a voice on Cen Cal’s board.
“As board members with a voting position, we will be engaged in all matters concerning Cen Cal’s operation,” Olivieri stated. “Coupled with the advisory committee, our goal is to maintain a direct connection with the Bakersfield community so local needs can be shared.”