OREM — A Utah County technology company is proving it can more than survive the recession by paying back a $1 million loan it received earlier this year — seven years before the payoff date.
The money represented pre-payment in full of the loan Zions Bank extended to the Orem-based software firm Fishbowl in May as a critical piece of the company’s buyback from its former majority investor to become fully employee owned.
In September of 2010, Fishbowl's top investor informed company leaders that he needed to withdraw his $1.5 million investment in 90 days, leaving the inventory software maker in dire straits having just gone through eight consecutive months of red ink.
Without the loan, Fishbowl could have been sold or possibly broken in pieces, according to chief executive officer David Williams.
"The initial thought was that it was a pretty short period of time," Williams explained. "But I know a lot of people with money. And we needed to keep the company together. We'd worked too hard."
He said the company spent the next several weeks contacting potential investors all over the country. At the eleventh hour, Zions Bank came through with a proposal for a $1 million, 84-month term loan. The letter of intent for the loan came on the final day of the 90-day deadline.
While the bank was able to lend most of the money, there was still a $500,000 shortfall. It was then that Williams said the rest of his firm's leadership team pitched in.
"They started to pull out their wallets, credit cards, wondered if they could trade in their 401(k)s," he said. "They were willing to get second mortgages, take pay cuts."
Eventually, the company raised the necessary capital and was able to meet its investor's obligation. Fortunately, over the next year, Fishbowl's production skyrocketed.
"The rest of the company rallied and achieved record sales," Williams said. The dramatic growth allowed the company to build up enough cash to pay off the entire loan by the date that the first regular loan payment was due this month.
“Our message is that we can transcend today’s economic challenges when we all work together as trusted friends and partners to honor the principles our forefathers brought to this great land,” said Fishbowl president Mary Scott.
Williams also commented that demonstrating how companies can achieve sustained growth while operating without accumulating excess debt was a critical lesson to be learned.
"We teach our employees to live debt-free," he said. "So we think it's important to live debt-free as a company."
That message resonated with the local financial institution that helped keep the company afloat when the firm was running out of options last year.
"We join with Fishbowl in adding our voice to the high priority of prudent use of business debt, and we are proud to have played this critical role in Fishbowl’s current success,” said Zions Bank CEO Scott Anderson.
Williams said he was proud of the way his company responded when the pressure was on the most. Because of the nature of the company's culture and its people, Fishbowl was able to survive and prosper — following the ideal of fiscal common sense, he said.
“One of the timeless principles our forefathers taught was financial responsibility — to not misuse or overuse debt,” said Williams. “We want to represent that message … that we must use debt prudently to remain strong."