SBA 504 Loan Helps Family-Owned Small Business Buy Property, Embrace Growth and New Job Creation

Welcome to Johnny’s Pallet Woodworks. This family-owned establishment, founded by Juan Gonzalez in 1999, has grown into a vital player in the local economy by building and repairing wooden pallets for commercial and retail companies.

Juan began his journey after gaining valuable experience at another pallet company. Applying what he learned, he soon gained traction on his own, establishing long-term client relationships with a handful of large, reliable companies. Annual profits followed, and the business steadily grew.

A Family Business Rooted in Dedication

For two decades, Juan worked as a sole proprietor until his oldest son, Juan Jr., expressed interest in helping run the business.

“I tried college for a couple years, taking business classes,” Juan Jr. recalled. “But then I realized that I could learn just as much about business from someone who’s been successful at it—my dad.”

Working side-by-side with his father, Juan Jr. quickly acquired the skills and confidence to become the operations manager for Johnny’s Pallet.  With Juan Jr. running the day-to-day operations, Juan Sr. had more time to focus on acquiring and retaining clients, critical for financial stability and the ongoing growth of the business. The youngest son in the Gonzalez family, Joe, age 26, has also joined the operational mix.

Depending on the ebb and flow of business, Juan Jr. said there can be as many as 75,000 pallets stacked two stories high on their 2.5-acre work site. Most of the pallets are standard size, but some are built and repaired to custom specifications.

When the pandemic struck in 2020, Johnny’s Pallet was deemed “essential” to the product distribution chain and allowed to operate without disruption. The demand for pallets accelerated, and the Gonzalez family reaped the benefits. Business gross revenues and profits climbed.

For more than 20 years, Juan Sr. leased the property where Johnny’s Pallet operates. His reputation as a reliable tenant and entrepreneur earned him the property owner’s respect and loyalty. So when the owner’s family decided to sell the property, Juan was given the exclusive opportunity to secure financing and buy the land.

Creating the Path to Ownership

Rising to the challenge, Juan Sr. and Juan Jr. met first with several large banks. The most generous financing offer they got would only cover 25 percent of the property’s purchase price. Seemingly a dead end.

The Gonzalez family found an opportunity with Emanuel Jimenez, a vice president at one of the banks. Emanuel was transitioning to a new position with CalPrivate Bank, but he saw potential in the Gonzalez family to participate in the SBA 504 loan program to get the $11.1 million financing they needed. 

Emanuel invited his colleague and SBA loan officer Mike Choi to help guide the application process. He also called in SBA expert Ida Landi of CDC Small Business Finance, a nonprofit Certified Development Company (CDC) and part of the Momentus Capital family of organizations.

The SBA 504 program provides long-term, fixed-rate financing for commercial real estate purchases and tenant improvements. The loan is unique in that it requires a partnership between a bank and a CDC and only asks the small business owner to contribute a 10 percent down payment.

“The Gonzalez family’s strong down payment to support the purchase of a unique property made this perfect fit for the SBA 504 loan program,” said Ida. “With future growth, they anticipated creating new jobs and contributing to the economic development of the area where Johnny’s Pallet Woodworks is located. We were pleased to add our expertise to the transaction and make the purchase happen for Juan Sr. and his family.”

Juan Jr. played a pivotal role in the loan application process. The SBA requested a copy of the Johnny’s Pallet business license, which didn’t exist because the business is physically located on a sliver of “no-man’s” land under the jurisdiction of the County of Los Angeles, which doesn’t issue business licenses. Juan Jr. spent two full days in the city offices of La Puente and Industry, securing letters that disclosed the anomaly. Once delivered to CDC Small Business Finance, the SBA 504 loan was allowed to close.

Emanuel’s faith in the Gonzalezes was rewarded when the loan closed.

“Juan Sr. and his sons are very hard workers,” Emanuel said. “Juan Jr., in particular, is a fast learner and is demonstrating a command of the operational and financial aspects of the business.”

Juan Jr. admits he was nervous throughout the loan application process.

“I was worried about being able to afford it; it’s a big number,” he said. “But we’re on the other side of it now, and my family feels blessed. We make a good team and can focus on growing the business even more.”