Formed by El Pasoans Cliff Eisenberg and Tony Furman as a subsidiary of American Finance & Investment Co, Inc. (“AFIC”) in 1993, Interstate Capital, reached a milestone in 2012 seldom achieved by small businesses: It’s 20th year in business.
Interstate is what’s known in the finance industry as a “factoring company”, a firm that provides funding for small and mid-sized businesses by advancing money to companies, secured by their “accounts receivable”–a sort of business-to-business “IOU”. By factoring their accounts receivable, small businesses are able receive immediate payment for their goods and services from their factoring company, rather than having to wait for their customers to pay–which often may take up to 60 days or more. For its services, the factoring company earns a small percentage of every sale.
A Subway sandwich shop now occupies the original home of Interstate–a small office space in Santa Teresa, NM where Mr. Furman and Louis Cohen, ICC’s Vice President, used to pass the time by hand-writing checks and scribbling transactions long-hand on pre-printed forms. Mr. Furman’s wife, Robin, was the company courier, zipping around town in her mini-van with baby in tow. Interstate’s few clients in those days were in the garment and construction trades.
A lot has changed in 20 years.
Cohen and over 50 on his operations team now tend to the cash flow needs of over 700 small businesses day in and day out. “The passage of NAFTA in 1994 changed the business climate in El Paso”, explained Furman. “Suddenly, our prospective clients were no longer in El Paso, but in Shanghai. I had to figure out another strategy to expand.” Fate brought Mr. Furman together with another El Pasoan, who together with Mr. Furman, discovered they could market the factoring business nationally by connecting their desktop computer by telephone line to a network of other computers. In 1994, the Internet was a place where universities shared research, but virtually no commerce was conducted there. “We caught on pretty quickly and beat our competitors to the Internet marketing punch.”, Furman explains.
By 1998, Interstate was becoming proficient enough at marketing the 5-year-old company on the Internet that it had to expand into a new building that still houses a majority of Interstate’s employees today. Near the time of its relocation to its new digs in 1998, Interstate Capital funded $120 million of receivables for its clients for the year. In 2004, Interstate signed its first Canadian client in Saskatoon, Saskatchewan and soon thereafter, opened a Canadian office in Toronto, Ontario. By then, Interstate was funding about a $ quarter billion of invoices per year, or $20 million a month in volume. Company headcount was about 30 people
Interstate’s marketing machine started showing signs of wear early in 2008 and for the first time in its history, ICC’s balance sheet contracted, so Furman made what he describes as the most terrifying business decisions of his career. ICC took back 100% control of its Internet marketing operations and Furman dissolved his 14-year marketing partnership.
With the help of Impulse Development, a boutique web developer in El Paso, Interstate Capital designed a unique new website with first-of-its kind technology never before used in the factoring industry. Since then, ICC and Impulse developed several proprietary web-based technologies that allow ICC to deliver more funds to more small businesses at a lower cost than ever before. Mr. Furman adds, “ICC owes much of its recent growth to the programming skills of Brandon Silverstein, Impulse Developments’ owner and Chief Technology Officer. He’s done a great job of turning my ideas into working solutions.”
Interstate’s newest venture, a subsidiary known as Interstate Business Capital, is focusing on a more traditional sales and marketing approach in southern California. Located in San Diego, Interstate Business Capital team relies primarily on Interstate’s network of bankers, lawyers, and brokers, as well as telemarketing, networking, and direct sales campaigns to continue building the Interstate brand in southern California and beyond.
“Despite a hyper-competitive landscape, we’ve achieved consistently positive asset and earnings growth throughout several very challenging business cycles. But what’s most important to me is that Cliff and I have remained close personal friends throughout the years we’ve been business partners. It’s rare to maintain any friendship for 20 years, much less a friendship with someone you work so closely with day in and day out. I’m extremely fortunate to have found a business partner and friend like Cliff. Most of all, our business success is owed to Cliff’s leadership and lots of long-term, highly devoted employees.”, Furman added. Many employees have been with the company for 10 to 15 years.
Today, Mr. Cohen’s operations team “onboards” 30 to 50 new clients every month, mostly in the transportation, staffing, oilfield service, and wholesale distribution industries. The funding that Interstate Capital has provided to small businesses in El Paso and beyond is responsible for the creation of thousands of jobs. ICC, its parent (American Finance & Investment Co., Inc.), and affiliates employ 75 people in Santa Teresa, El Paso, San Diego, Dallas, and Abilene. In the fiscal year ended June 30, 2012, its 20th year in business, Interstate Capital reached another rare milestone: It funded over $500 million of receivables for over a thousand clients, making it one of the largest privately-held, non-bank factoring companies in the U.S. Interstate’s five-year plan calls for funding volume to reach $1.0 billion annually by 2017.
Contact: Tony Furman
Interstate Capital Corporation