SBA loan propels model boat manufacturer.

In the 1960s Alvin Prather and his son Terry teamed up to fly model airplanes in competitive meets. Alvin helped to design and build the planes and served as pitman for his son. Alvin's affinity for remote control (RC) models and his expertise in modeling operations and design propelled him to become involved in competing in RC model boating. His success in this endeavor involved numerous first place finishes at local competitions and several national championships. In 1971, Alvin figured why not turn his hobby into a part-time business centered around RC boat kits. The business gained momentum and Alvin devoted himself full time to its operations. In 1986 the company was incorporated into Prather Products, Inc.(PPI) and continued to manufacture its product line in an 8,000 square foot plant in Long Beach.

As is required of all businesses, the Prathers adapted to the various demands of hobbyists in the 80s and early 90s and prospered accordingly. The company's early focus was on the "traditional boat kit product" presentation, which involved a certain amount of applied labor or craftsmanship on the part of the buying enthusiasts. However, as taste trends in the hobby industry changed to favor less active building by the fan and toward ready-to-run boats, PPI segmented its marketing efforts and proceeded to create a niche in the manufacture of quality performance RC boats and accessories. Serving as a testimony to the success of this strategy is the fact that Prather boats have consistently taken prizes in competitions and perennially set many National records. The firm sailed on calm waters until a recent set of negative circumstances whipped up the head winds of an un-navigable tempest. As the company continued to stress the sales of fully assembled boats, PPI experienced ever increasing pressure on its cash flow. In an industry where the high end products often retail for as much as $1,500 the ready to run models required an increased investment in inventory, related to models and accessories, as well. In addition, payroll costs grew as a result of the more labor intensive process associated with the fully assembled models. Such was the course PPI was trying to steer through when it was suddenly hit with 9-11. Sales plummeted. Management ascribed its 30% sales decline to the unfavorable impact that this tragedy had on consumer spending and the retail industry.

Smartly, PPI developed a strategic plan to expand and enhance the promotion of its business lines, but was prevented from its effective implementation due to cash flow constraints and high interest costs. The company attempted to obtain financing, but unfortunately was turned down by several banks. Saddled with debt and lacking the cash flow to do anything other than stay afloat, management approached the SBA's Los Angeles District Office for help. After several counseling sessions with SBA officers including Finance Division Chief Keith Colter and District Director Alberto G. Alvarado, PPI restructured its loan package and presented it in a more favorable light. As a result SBA enlisted the collaboration of Pacific Crest Bank who worked with the company and provided PPI management the much needed funds for working capital, inventory, and operations improvement.

As a result of SBA financing, PPI can now focus on moving forward. The Prathers are in the process of expanding the line and new products will soon hit the market. Upgraded promotional strategies will soon take hold and drive revenues. Operating Expenses will be reduced in relationship to sales, reflecting the favorable interest rate of the new SBA loan. Expectations are for clear sailing.