When you talk about the phenomenal growth of a company, you needn't look further than Advanta Financial Corp., 11850 S. Election Road, a company helping boost the nation's economy.
Started in 1991 with four employees as a subsidiary of Advanta Corp., Philadelphia, Pa., AFC launched its first Master-Card Business Card in July 1994 and initially had 1,000 accounts.A year later, the company had 15 employees and 18,000 accounts, and today there are 95 employees managing assets totaling $293 million, of which there are 670 accounts in Utah worth $6.7 million, said Larry Richards, president and chief executive officer.
The employees service more than 65,000 national leasing, business credit card and savings deposit accounts. The company is growing so fast that it moved into its new 72,000-square-foot building last year and already occupies 50 percent of the space. Richards expects to hire additional employees soon.
Richards said Utah has used its industrial loan corporation charters, an unusual banking permission granted for economic and business development, to attract businesses to the state.
"Utah held up these ILCs to the financial community and said, `Look what we have.' What Utah's ILCs have created is an unusual commercial entity with banking powers that has attracted big players in the financial services market to Utah - players like AT&T, General Electric, Merrill Lynch, Fidelity Investment, American General, Fingerhut, Providian Bank Corp. and Advanta."
Advanta offers two products from its Draper location, a small-business credit line and a municipal leasing program.
Using high technology to identify profitable customers, Advanta solicits them through direct mail. Richards said customer response is higher than typical direct mail results, and he credits Advanta's pre-identifying methods, targeting companies based on a small-business owner's personal business profile, for the success.
The credit issued to BusinessCard customers ranges from $5,000 to $20,000, and all underwriting, approvals and servicing are done at the Draper location.
The credit line is designed for businesses with fewer than 10 employees and less than $1 million in sales.
Richards said that when he was a banker there was no way he could provide the line of credit that Advanta offers, but because of modern technology the credit underwriting is possible.
A BusinessCard is used in a business just like an individual uses a credit card. It is presented to a merchant when the business owner makes a purchase, and the amount is deducted from the line of credit. A quarterly statement is sent to each customer.
If the business owner purchases a piece of equipment with the card, AFC can convert the purchase to a lease and the business owner retains the line of credit, Richards said. The business owner makes monthly payments, and AFC makes money on the loan balance or the interest on the lease.
Richards said the cards contain the name of the company and soon will have a picture of the user. He said the cards are helping small businesses meet their needs.
A second product from AFC is a business equipment leasing program for small municipalities in the United States. Richards defines a small municipality as one that issues less than $10 million in debt annually. Customers work through a national network of 4,500 brokers and product vendors.
If a municipality cannot afford to purchase a piece of equipment, a municipal representative visits the local dealer and the dealer sends the lease to Advanta for servicing.
School districts, colleges, hospitals operated by cities, water conservancy districts and small municipal government offices lease copiers, telephones, cash registers, fax machines, medical equipment, security systems, stenographer and court reporting equipment, computer software and furniture under this plan.
The average lease is $13,000, and Advanta currently is approving an average of $1.7 million in loans per month. Richards said this system allows the city or town to upgrade its equipment outside of the capital budget, an advantage because the equipment might be needed before it can be included in the next budget.
If St. George officials want to purchase a new copier, for example, the purchasing agent visits a dealer, who explains the cost. If the city officials decide to lease the copier, the dealer sends the lease to AFC. If Advanta approves the lease, the copier could be delivered within a week, Richards said. Because of the technological methods used in analyzing its customers, Advanta's loss rate of 2.3 percent is low in relation to other financing programs, Richards said.
AFC is operated like an independent company, Richards said. The board of directors consists of William Wirthlin, president of Associated Title Co.; Cal Boardman, a professor of finance at the University of Utah; and Fred Gonzales, president of Northern Outfitters.
Advanta Corp. was started in 1951 in a Philadelphia garage by Jack Alter, a schoolteacher who discovered that teachers had a tough time getting loans. His Teachers Service Organization made loans to teachers, and today the company has 3,000 employees, 6 million customers and $18 billion in managed assets.
The company's stock is publicly traded on Nasdaq.
Richards said Dennis Alter, Jack's son, is the current chairman of the board. He relies on a professional management team, and the company ranks among the top 15 credit card issuers in the country. Other members of the corporate team besides Alter are Rich Greenwalt, chief operating officer; Peter Hart, former president of MasterCard International, chief executive officer; and Bill Rosefell, vice chairman.