How a SBA Real Estate Loan Gave Waterstone a Competitive Edge
Back in the early days of California-based Waterstone Faucets, founder Chris Kuran received a familiar piece of advice from a banker: You're probably not going to make it.
"I remember being told by a bank that we were undercapitalized... they didn't think we'd succeed," Kuran recalled, reflecting on his earlier attempts to secure traditional bank financing years ago.
A graduate of the U.S. Naval Academy and a Marine Corps veteran, Kuran has always been someone who refuses to give up. With the help of two SBA loans, he has transformed Waterstone Faucets into a leading brand for high-end kitchen faucets across the nation, attracting customers from the affluent and famous alike. One of these loans was an SBA 504 real estate financing provided by CDC Small Business Finance, with the assistance of senior loan officer Merri Adams.
Now celebrating its 20th year in business, the American manufacturer employs over 145 people, boosting economic activity in their hometown of Murrieta, California.
"We found a way to just keep pushing forward; we don't back down," Kuran said, walking through the bustling production area of his 42,000-square-foot factory on a recent weekday.
MAKING THE BEST FAUCETS IN THE WORLD
Established by Kuran in 1999, Waterstone Faucets initially focused on selling parts and finished components to large filtration companies producing drinking water systems. When clients requested custom-finished institutional drinking water faucets, Kuran saw an opportunity. Waterstone shifted gears towards creating premium filtration faucets in various finishes, eventually adding kitchen faucets to their lineup in 2005.
Ever since that pivot, Kuran—alongside his business partner and VP of Manufacturing, Steve Kliewer, who joined in 2001—has been determined to create "the best faucet in the world."
COMMITMENT TO MADE IN THE U.S.A., AND EXPANSION
Today, Kuran takes pride in knowing that every faucet produced is crafted entirely by machine and hand within their Murrieta facility.
"From the very beginning, I knew I wanted a product made in the USA," Kuran stated.
Every step of the process—plating, curing, polishing—is carried out within the 42,000-square-foot building, which Kuran purchased in 2014 using an SBA 504 loan from CDC Small Business Finance. Previously, they were leasing the space with an option to buy. Their old location was a mere 13,000 square feet. Why expand? Kuran and his team wanted to handle the finishing work in-house, requiring more room for machines and staff. Outsourcing this function had been costly and difficult to control in terms of quality. By bringing it in-house, Waterstone could better manage costs and maintain consistent quality.
Since relocating to the larger facility, demand for Waterstone products has surged, largely due to recommendations from architects and high-end interior designers. To keep up, they've introduced new machinery to boost capacity and adopted a "lean" production model. This system enables every team member to easily track where components are in the production line, improving overall efficiency. With roughly 750 components to monitor, the lean approach has been essential for success, Kuran explained.
HOW AN SBA 504 LOAN LED TO GROWTH
Realizing the advantages of owning commercial property, Waterstone pursued this goal with the help of an SBA 504 loan. Designed for real estate and major equipment purchases, this type of financing offers fixed, affordable rates and requires only a 10% down payment.
The SBA 504 loan provided Kuran and his company numerous benefits:
- Economical Savings: His mortgage payments were lower than what he had been paying in rent.
- Stable Monthly Payments: Fixed interest rates meant predictable monthly expenses, eliminating surprises.
- Building Equity: Owning property allowed him to build equity in his own asset, investing in the future.
"This loan gave us the edge we needed," Kuran remarked. "I'm living proof that SBA loans can truly help small business owners get established."
Merri Adams, a senior loan officer at CDC Small Business Finance, facilitated Waterstone's SBA 504 loan.
"With the SBA 504 loan program, they were able to purchase the building with just 10% down while securing a low, fixed rate," Adams noted. "The fixed rate ensures stable monthly payments that remain constant over time, enhancing profitability and stability for businesses."
"It's a labor of love," Kuran concluded.
HOW CDC HELPED
- Provided an SBA 504 loan to acquire a 42,000-square-foot building in Murrieta, California.
- Offered an affordable, fixed-rate mortgage for stable monthly payments.
- The mortgage was less expensive than the rent they had been paying.
- Enabled hiring, increasing the workforce to 145 employees.
WHAT'S NEXT FOR WATERSTONE FAUCETS?
With a strong presence in the luxury kitchen faucet market, Waterstone is now eyeing expansion into the bathroom faucet segment. They're currently developing new designs, which are expected to launch around 2020. Their sprawling facility in Murrieta houses production, warehousing, and office spaces.
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