Dealstruck Helps One of San Diego’s Fastest Growing Companies Become Bankable
Custom Lending Package:
- Initial funding from Dealstruck: $100,000 term loan, 24 months at 11% APR
- GRADUATED: June 2015 to JP Morgan Chase with a $60,000 SBA backed term loan, $125,000 inventory line of credit and $250,000 working line of credit with average APRs of 5% - 6%
- Ability to purchase needed equipment and hire for expansion
- Easy to manage monthly payments
- Build solid lending history
San Diego, CA
Year in Business:
ZTelco is a San Diego-based business communications solutions provider, offering custom voice, data and networking technology services. The company helps businesses find the right communications infrastructure to optimize performance.
Founded in 2004, ZTelco spent years perfecting the way to run a VoIP company properly. In recent years, a steadily increasing flood of referral business required the small but growing firm to seek growth capital. But as a small and successful business often finds as its success increases, evolving too quickly can introduce new challenges. To keep pace while harnessing new opportunities as they came, ZTelco needed new technology, processes and a way to scale.
As ZTelco added to its customer roster, the business model that had worked in the beginning was stretching the company too far. Some customers would buy phone systems, internet accessibility, or other equipment from ZTelco, and others would lease the hardware and pay a monthly fee to house the equipment on-site. With growth accelerating, such lease financing wasn’t sustainable for ZTelco.
In addition, the service provider’s homegrown accounting system, was no longer strong enough to handle the pace as new staff and clients were joining the ranks. ZTelco needed to replace its legacy tools with higher-end, more commercial-grade systems.
Lastly, new customers stretched time as well as expenses. The onboarding process for new accounts was resource-intensive and it became increasingly difficult for CEO and founder Jake Hansen and his colleagues to live up to the company’s mission: “Always be there for our customers.” In Hansen’s words, “When you’re fishing on a boat that’s loading up with fish, catching too many can cause you to sink.”
Need For an Alternative Solution
As is the case with many small businesses, ZTelco’s initial need for a loan was not a match for traditional banks. Large lending institutions require auditable data for loan approval – the least of which comes from years of financial statements – and ZTelco did not have such data. Unsure of where to turn, Hansen set out to find help elsewhere and when an associate introduced him to Dealstruck, he thought it was worth a look.
Dealstruck is an online direct lender, with a mission to provide small business owners with unique, affordable, and appropriate capital with honesty and transparency. And that’s exactly what Dealstruck did for ZTelco. When reviewing the opportunity offered by Dealstruck, Hansen felt comfortable.
“Dealstruck was willing to take a risk than the banks weren’t, which made us a fit” said Hansen. “And the fact that their whole process is online and very fast was amazing to us and made a lot of sense. You take the bank out of the mix, which is usually the entity that makes the money – and you give it back to the investors and the companies in need of help – and you have a unique proposition that benefits everyone.”
The Path to Being Bankable
The Dealstruck loan was funded within a couple of days, according to Hansen. “They just said, ‘we’re going to get these people to invest in you, and they understand that it’s a higher-risk-and-higher-reward type of scenario, and you’re the type of company that needs this.’ So how could we say no?”
ZTelco used the money for a few things. “First, it enabled us to continue with in-house financing. Then we bought a service vehicle. Nothing fancy, just an old electrician’s truck from ’82 or something. Diesel. A beast. We put some money into it and now it’s our service vehicle for our infrastructure and cabling work.” The vehicle allowed ZTelco to follow through on its mission to always be there for its customers.
The company also bought new hardware and replaced its old systems with modern enterprise-grade tools, optimizing its business quickly.
“The process from signing up to being funded went very quickly, so we were able to make needed changes really fast. The capital we received helped take a lot of pressure off our overhead. I’ve referred some other companies to Dealstruck. They helped us move beyond R&D and selling, to mainly selling – a lot. Their platform looks scalable. As an entrepreneur, I wish I’d thought of it myself.”
Since receiving funding from Dealstruck, ZTelco has grown leaps and bounds, going from eight to 13 employees, purchasing a second service vehicle and moving to much larger office space all while doubling revenue. Hansen attributes the success equally to receiving needed capital at a critical time and to learning more about managing the business’ finances, like how to properly leverage his credit line. With the funding Dealstruck provided, ZTelco was able to realize sustainable growth, build credit history and transition into the traditional bank arena for small business lending, successfully navigating the path to becoming bankable. ZTelco recently secured a $60,000 SBA backed loan from JP Morgan Chase as well as a $125,000 inventory credit line and a $250,000 working capital credit line. Hansen proclaims, “I definitely recommend Dealstruck to any sort of business in a similar situation as us. It’s a great option [and] Dealstruck was really helpful and was a bridge to get us where we needed to be from where we were”. We applaud ZTelco’s success and financial responsibility and are proud to call ZTelco a true Dealstruck success story.