MIAMI LAKES, Fla.—Like many Sunshine State businesses, the recession proved challenging for Edda's Cake Company. In 2011, the Miami-based bakery needed a line of credit to expand operations, but local banks weren't interested in what they considered a small-dollar loan.
So Leo Martinez, the bakery's president, turned to JetStream FCU and opened a line of credit that has kept the cake company cooking. Edda's was doing about a half million in sales two years ago, and has more than doubled that total today.
"The credit union was there for us when bank funding dried up," said Martinez, who explained the money has helped his bakery accommodate requests from big box retailers, like Publix and CVS, to expand operations and provide cakes to their stores in the southeast.
"One of the things we needed money for was just boxes for our cakes because the new orders were so big," said Martinez.
JetStream is among a growing number of credit unions seeing the value in micro-business lending-loans less than $50,000 for commercial purposes. Micro-loans are catching the attention of credit unions because they do not apply to the MBL cap as long as the total loan relationship with business does not exceed $50,000, they provide a new loan stream and help the local economy (see related story on this page).
The first loan the $158 million CU made to Martinez was in 2005 for delivery vans. The CU liked the owner and his business plan and stayed connected with him.
"We have been with this business through good and tough times and watched them grow," said Leo Navarro, AVP of business services at JetStream. "This is a business now that a lot of financial institutions are interested in working with. But it's going to be difficult for them to capture the business due to the relationship JetStream has established."
Edda's Cake Company is growing, just as the bakery's retail side has done since the '90s. Edda's Cake Designs was started by Martinez' mother, Edda Martinez, and grew from baking cakes out of her home to four retail stores in south Florida that generate a total of $4 million in annual sales.
Navarro said the cake company is an example of how a series of small loans to a business can grow into something much bigger for the credit union.
"It's down the road, but now Edda's Cake Company is considering expanding their wholesale facility, which could be an opportunity for us to finance a building-possibly a loan for $2 million."
