With the help of a business assistance program started under the Morgan Hill redevelopment agency and the National Development Council, the city plans to ease Santa Clara-based AeroTron Manufacturing Company’s relocation to Morgan Hill with a $500,000 loan.
The loan was offered through the Grow Morgan Hill fund, which was initiated by the RDA under the umbrella of the NDC’s Grow America Fund, according to Morgan Hill principal planner for economic development, Edith Ramirez.
The $500,000 loan to AeroTron will bring about 35 jobs to Morgan Hill, and help the company equip, staff and open its 45,000-square-foot local facility on Caputo Drive, which requires property improvements before it can become fully active, AeroTron co-owner Mike Melton said. The building is about 60 percent the size of the newly opened retail superstore Hobby Lobby in Cochrane Plaza.
AeroTron has owned the building in Morgan Hill for nearly two years, but has thus far been unable to complete its planned relocation from Santa Clara due to the difficulty in acquiring financing, Melton said.
“We’ve been trying to bring the Morgan Hill facility on line for over 18 months,” Melton said. “We just needed a capital injection that would allow us to open up our shop, and are excited to be able to finally plan for a grand opening.”
AeroTron manufactures a wide range of products, including aerospace components, medical devices, locomotive air-brake systems, semiconductor testing equipment and telecommunications products.
City officials frequently used or attempted to use RDA resources to successfully attract new companies and economic development to Morgan Hill for decades before the agency shut down Feb. 1. The continuation of the Grow Morgan Hill fund and the issuance of its first loan represents an ongoing commitment to those goals, Mayor Steve Tate said.
“The leadership of this city has worked hard to retain, attract and expand small businesses in the city,” Tate said. “We are thrilled that our investment with NDC has resulted in the retention and growth of AeroTron, which will not only bring at least 35 jobs to Morgan Hill, but contribute in the short- and long-term to Morgan Hill’s overall industrial diversity and economic health.”
Melton added that it’s not just the money that helps. The favorable financing structure of the $500,000 loan is also helpful to AeroTron in their efforts to open the local shop and bring jobs to Morgan Hill.
“They had the flexibility to structure the loan in a way that worked for us,” Melton said.
The Grow Morgan Hill fund works with the city and local banks to identify small businesses that are seeking loan options that traditional loan plans are unable to offer, Ramirez explained.
That allows the NDC, Grow America Fund and Grow Morgan Hill funds to offer less-restrictive, less-burdensome repayment structures, including longer terms, larger loans, lower down payments and lower interest rates than traditional sources of loans, according to GAF’s president.
“We recognize that there are times when even the most accommodating traditional lending institutions just cannot offer terms that make sense for a small business,” said John Paylo, Grow America Fund president. “It is our goal to serve those businesses, and the banks by helping small businesses build the credit and finances needed for more traditional loans.”
The Grow Morgan Hill fund is one of about 40 similar local offshoots of the Grow America Fund across the country, Ramirez said. The RDA started the program a couple years ago with a $500,000 investment, to gain access to a total of $2 million in resources for similar loans for local business.
With the loan of $500,000 to AeroTron, there is now about $1.5 million in the Grow Morgan Hill fund.
The loan to AeroTron, which was announced last week, is the first loan successfully transmitted from the local fund, ironically more than seven months after the state of California closed the redevelopment agency.
Numerous businesses have been contacted and shown interest in a Grow Morgan Hill loan since the program was created, but for varying reasons those prospects didn’t pan out, Ramirez said. The city has aggressively marketed the loan program in recent months, knocking on doors and mailing promotional letters to new businesses in town.
“We have taken a more proactive approach in trying to market the program over the last half-year,” Ramirez said. “Recognizing we have limited resources without the redevelopment agency, this is one of the tools we have to help capitalize.”
The company is in “growth mode,” and adding to what appears to be a growing manufacturing sector in Morgan Hill, Ramirez said. While AeroTron has owned its Morgan Hill facility for nearly two years, it has been unable to acquire financing to equip and improve the property to accommodate the local manufacturing operation until now.
About 25 people currently work for AeroTron, Melton added. Those employees will move to Morgan Hill when the facility is opened, and the company will be able to hire about 10 more people after it opens around Christmas time.
The company has already started moving its manufacturing equipment into the building.
