A new Sacramento-based lending website is getting lots of traction – thanks in part to some powerful family connections.
The site, MagillaLoans.com, was launched three months ago by entrepreneurs Dean Sioukas and Chris Meyer with the idea of enabling business borrowers to go online, post information about their ventures and then get responses from participating lenders.
The secret sauce separating it from other online lending sites: Prospective borrowers don’t need to provide their identities or detailed financial records until a match is made and they sit down with a lender.
“It saves time for borrowers and lenders. It’s a win-win in both directions,” said Sioukas, a local developer and attorney.
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So far, the site has matched banks with prospective borrowers seeking about $270 million, according to Sioukas. Among those borrowers: Sacramento-based Pappas Investments, which was founded by Louie Pappas, Sioukas’ father-in-law.
Pappas used the new system to secure a loan from Bank of the West for its recent $74 million acquisition of the three-building Farmers Market office complex at Alhambra Boulevard and R Street and is planning to use it again when it seeks a loan for a planned Whole Foods grocery and apartment complex at 20th and L streets.
“To be honest with you, it was the (family) relationship,” Louie Pappas said when asked why he was willing to give Magilla a try.
But he has since concluded it’s “the system of the future. It’s so simple, and it gives you a lot of choices” when seeking a loan.
Sioukas said he and Meyer developed the system as a response to their own frustrations in securing business loans.
Meyer, who runs a chain of funeral homes, had run out of patience when looking for financing.
“He said, ‘I just can’t do this anymore. Why am I wasting all this time driving from bank to bank, meeting to meeting, and going through the gantlet of the bank hierarchy,’ ” Sioukas said.
The partners’ first version of Magilla called for borrowers to provide their names and other personal information along with their financing needs.
“We patted ourselves on the back and said, ‘We’ve just built something we’d never use,’ ” Sioukas said.
That’s because they – and lots of other borrowers – would never post sensitive financial information on a website, “no matter how secure.”
That led to the current anonymous model, which is catching on in Sacramento and will be expanded next month to the Bay Area and then Southern California.
Sioukas said Magilla lets qualified borrowers cut through red tape, find just the right loan officer at a bank and then choose from competing offers – even if they have a long-standing relationship with an existing lender.
He likens it to getting a plane ticket. A customer may have a preference for flying on United Airlines but would be wise to go to a site like Kayak.com to compare alternatives.
As he noted, “What if Delta has a better route with fewer stops and it’s cheaper? How would you know?”
So far, Sioukas and Meyer have yet to collect a single dollar in revenue. That’s because they’ve chosen to prove their concept and build their user base before “pulling that trigger.”
Their plan is to keep the system free for borrowers and eventually charge a subscription fee to lenders.
When will that happen? Probably when the company starts rolling out what the partners hope will be a national expansion.
“As soon as you flip the switch (and begin collecting fees),” Sioukas said, “you can take those resources into the next city.”
Bakery’s invisible expansion
Its customers may not realize it, but the popular Karen’s Bakery & Cafe in Old Folsom has practically doubled its space.
After years of having its cooking and baking staff squeeze into a tiny kitchen, the business has leased a nearby building that formerly housed the Thai Siam Restaurant.
As of Dec. 1, the business’s bakers have moved into the new 2,500-square-foot space, food-prep staff have taken over the bakers’ old digs in the back of the original building and “front staff” have taken over the former food-prep space.
“Now everybody has some elbow room, and you can hear this collective sigh of relief,” said owner Karen Holmes, who opened the business 15 years ago.
She plans to open a cake-consultation space in part of the new building, which is across a courtyard from the cafe. But not yet.
“I want to let the dust settle a little first,” she said.