SpringStar Inc.: From Bankruptcy to Success
By: Access to Capital, Dun & Bradstreet - Oct 23, 2013
Source: Access to Capital, Dun & Bradstreet
In 1998 Michael Banfield launched his company, SpringStar Inc., and introduced non-toxic, environmentally safe pest control products to the Seattle region. SpringStar positioned themselves as an alternative for many harmful pesticides, and developed a complete line of products for the home and garden. The Company quickly extended sales to a national and then an international level. Although SpringStar has experienced growth in size and sales in recent years, their success could have fallen short had it not been for Craft3, a community financial development institution (CDFI), who supported SpringStar by taking over their business loans after being forced to declare Chapter 11 bankruptcy.
As SpringStar grew, it explored the option of having products manufactured overseas expecting to lower its manufacturing costs. The company quickly found that the technologies behind their products were being resold by the overseas contractors, as competitors with eerily similar products released shortly after SpringStar’s. SpringStar made the strategic decision to bring its manufacturing processes and advanced methods in house for better cash flow, lower costs, and strict quality assurance. SpringStar obtained an equipment loan and line of credit with a traditional bank. Although the Company stayed on track to increase profitability, the bank withdrew credit, even though SpringStar had made every payment on time and showed continued ability to repay the debts. SpringStar offered different ways to pay the bank out on an expedited schedule, within its cash flow. The bank refused every offer, which eventually led SpringStar to declare a Chapter 11 bankruptcy to stop the bank from shutting it down.
Fortunately for SpringStar, they had met with Walter Acuna, a business lender for the Seattle, WA region of Craft3. “As a Craft3 lender, what got my attention was that they were manufacturing their products locally, which provides jobs to the community. Not only that, but their products are Eco Friendly which helps to protect the environment. These two components are very important for Craft3 mission,” shared Acuna. SpringStar was able to manage its business through the bankruptcy process, miraculously continuing to increase sales 15% in 2012, and 40% for 2013, and adding over twenty employees. Based on this, in 2013, Acuna and Craft3 provided a business loan to replace the bank when SpringStar was discharged from its Chapter 11 bankruptcy.
“Craft3 came into a difficult situation with our company, and luckily for us they support local manufacturing in Washington,” shared Banfield. With the help of the approved loan, SpringStar continues to grow its business and is able to manufacture high quality products for less than they can buy from overseas, without having to share its secret processes with foreign competitors.
SpringStar now works solely with Craft3 and continues to grow, with sales projected to increase 60% for 2014. Both Craft3 and SpringStar will be joining us to speak and provide insight on the Alternative Lending Panel at the upcoming Access to Capital event in Seattle. Bringing all of SpringStar’s business processes back to a local level proved effective for the company with the help of Craft3, a local CDFI.