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 cash 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 sandwich shop now occupies the original home of Interstate–a small office space where Mr. Furman and company Vice President, Louis Cohen (Mr. Eisenberg’s brother-in-law), used to pass the time by hand-writing checks and scribbling transactions long-hand on pre-printed forms. Interstate’s few clients in those days were in the garment and construction trades.
A lot has changed in 20 years.
“The passage of NAFTA in 1994 forever altered the business climate in El Paso”, explained Furman. “Suddenly, my prospective clients in the garment industry were no longer able to compete in El Paso. Nearly all of them fled to Asia. I had to figure out another strategy to expand.” Fate brought Mr. Furman together with another El Pasoan, who together, discovered they could market Interstate Capital’s 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 had become 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 was funding about $120 million of receivables annually. In 2004, Interstate signed its first Canadian client in Saskatoon, Saskatchewan and soon thereafter, opened a Canadian office in Toronto, Ontario. By then, Interstate Capital was advancing about a $250 million of funds annually to its clients.
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 dissolved its 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 Impulse Development and Brandon Silverstein, its Chief Technology Officer. Brandon’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, the 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 expanding 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 relationship for 20 years, much less one that is equal parts friendship and business partnership. Both of us being Texas Exes hasn’t hurt, either. Sometime we find ourselves reminiscing about our most memorable UT finance professors and our favorite old buildings that are no longer part of the campus. Most of all, Interstate’s 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 brings on 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 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. Interstate’s five-year plan calls for funding volume to reach $1.0 billion annually by 2017.
Interstate Capital Corporation