Copying past success, office-systems company sets funding for expansion: loan program for construction helped SOS build new headquarters.

The Puentes are no strangers to the Small Business Administration. Three times in the 40 years since Victor Puente Sr. started Southwest Office Systems Inc., the family had turned to SBA-backed loans to expand its business.

So when sons Buddy and Vince Puente decided a new corporate headquarters was necessary to keep growing, they again looked to the SBA to help them achieve their dream.

"The loans have been for different parts of the dream" says Vince Puente, SOS president of sales and marketing. "They've enabled us in some cases to stay alive and in others to grow the business"

SOS sales have increased to $15 million from $10 million since the headquarters was built.

The Puentes financed their $2.4 million, 39,000-square-foot Fort Worth complex in 1998 with help from the SBA's 504 loan program, which provides long-term, fixed-rate financing for fixed-asset projects such as buying land, new construction and building renovations. The finance package includes a loan secured with a private lender and a certified development company (a local nonprofit that aids economic development).

Puente Brothers Investments teamed with Frost National Bank for $1 million and the Fort Worth Economic Development Corp. for $800,000 in funding for the project.

"SOS would not have been able to borrow as much without the SBA," says Buddy Puente, president of finance and operations.

Vince Puente looks at the company's SBA experience as a three-way partnership.

"You have to have a strong relationship with a local bank and with the SBA. And those two entities have to have a strong belief in you," he says. "Without a proven track record they couldn't do anything for us, and we couldn't do it without them"

Just four years after financing the headquarters, the Puentes paid off the 15-year note with Frost National Bank. In September, they paid off the 20-year Fort Worth Economic Development loan.

Paying off a loan before maturity is the exception, says Nathan Robinett, Frost National Bank regional president. Robinett has worked with the Puente family since the 1970s and says their integrity and consistency have been key to their business success.

Patriarch Victor Puente "had a vision of how to build a company and involve his children, and as a consequence, they're now running all the companies and have taken them to another level" says Robinett.

When Puente started Southwest Office Machines in 1964 with a handful of employees, his business was primarily typewriter repair. In the 1970s, his sons joined him, working as delivery drivers and selling and repairing typewriters and copiers. The company name changed to Southwest Office Systems to reflect its growth as office technology expanded.

The Puentes obtained their first SBA loan, for $287,000, in 1972. A second SBA loan in 1978 was for $387,000 as they expanded inventory to include office supplies and copiers.

In 1987 Buddy and Vince Puente obtained a $390,000 SBA loan to start 9 to 5 Office Products Center Inc., an office-supply company with three stores and a commercial outside sales force. Those stores closed in 1994.

By the 1990s, SOS no longer sold typewriters, and the business has evolved into a complete office solutions service, encompassing networking and digital business systems.

Today the company is known as the largest minority-owned, independent office equipment dealer in the Southwest.

>From the beginning Victor Puente also relied on the SBA for guidance. He tapped SBA training programs on aspects of managing a business, from financials to employment law to how to do business with the government.

"Any seminar that was free, we went to," says Buddy Puente.

In February, Buddy and Vince Puente met with SBA Administrator Hector Barreto at a regional roundtable to discuss issues facing small businesses. They were also presented the SBA District Director Choice Award in recognition of their successes.

Looking to the future, the Puentes want to double their revenue and sales force by 2010, and they're stepping up in-house sales training to match their already strong technical training, Vince Puente says.

"We continue to explore other areas and have our feelers out so that when technology changes, we're able to change with it."

The family is involved in their local business and civic community, serving on some 35 boards of civic and nonprofit organizations. A community center at the new headquarters is regularly used by groups ranging from Neighborhood Watch to Toastmasters.

SOUTHWEST OFFICE SYSTEMS INC.

Victor Puente Sr., chairman; Buddy Puente, president of finance and operations; Vince Puente, president of sales and marketing

13960 Trinity Blvd., Fort Worth, Texas 76040

[phone]

Year founded: 1964

Annual revenue: $15 million in 2003

Number of employees: 80

SBA-backed loan amount: $1.8 million

SBA loan terms: $1 million fixed, 15-year, prime rate from Frost National Bank; $800,000 20-year, 6.2 percent from Fort Worth Economic Development Corp.

About this program ...

What: Long-term, fixed-rate financing for fixed assets such as land and buildings. Typically involves a loan secured with a senior lien from a private lender for half the project cost, a junior lien from a Certified Development Company backed by the SBA for 40% of the cost, and at least 10% equity from the business.

Amount: Maximum SBA backing is $1 million and includes job-creation criteria or community development goals.

Step 1: Contact local Community Development Corporation. A list of CDCs is available at www.sba.gov/ financing/sbaloan/ cdc504.html. There are more than 270 CDCs nationwide.

Terms: Interest rates are pegged to an increment above the market rate for 5- and 10-year Treasury issues with maturities of 10 and 20 years.

Other stats: 504 loan volume increased 25.2 percent in fiscal 2003. A total of 6,863 loans were approved for a dollar volume of $3.16 billion. SBA reports the number of jobs created and retained was 127,475 for the year.