Sweeping up on Silicon

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They call it Silicon Valley, but where can you get the silicon? Ask Patrick Callinan. In 1990, Callinan decided to leave a multinational firm to set up a niche business from his home, supplying raw materials— silicon wafers—and wafer processing services to the semi-conductor industry.

Like most startup entrepreneurs, Callinan found getting financing was difficult for his venture, Silicon Valley Microelectronics, Inc. Then in 1992, Wells Fargo approved a line of credit for his company, 'We didn't go to them; they came to us, which was very helpful,' Callinan says. He used the line of credit to buy additional inventory. 'More inventory equates to more sales,' he says.

A year later, chc company switched its business checking account to Wells Fargo. Callinan says he made the switch because he liked how Wells Fargo treated him and responded to his needs.

'That year (1993) our company's sales were $700,000. By 1996, our annual sales had risen to $14 million,' says Callinan. The skyrocketing growth was spurred by a shortage of silicon wafers worldwide during 1995-96, says Callinan. As a result, Silicon Valley Microelectronics grew from three employees to 17, and increased its customer base from 70 clients in the U.S. to 350 worldwide. By 1996, Callinan needed to finance more inventory and his continuing expansion into the overseas market. Wells Fargo extended the company a 5500,000 line of credit and an equipment line of credit for $350,000.

As the company continued to grow, Wells Fargo Funds
Callinan found lie needed a checking account better suited to his firm's operations. Callinan's business requires quick access to liquid capital, but he didn't want his assets to sit idle. Quite simply, he wanted his money to have the potential to earn money, so he converted his business checking account into a Wells Fargo Business Dividend Checking Account (BDCA).

The account, also known as a 'sweep' account, pairs a money market fund account with a business checking account and provides the greatest benefit for those who maintain a 550,000 minimum balance. Funds not needed in checking are swept daily into the money market fund account. When checks are presented for payment, Wells Fargo sweeps the designated amount of funds automatically back to the checking account to cover them. As a result, the company earns money market fund returns on its checking funds and is able to put the earnings back into the company to buy more inventory. When Silicon Valley Microelectronics opened a second office in Simi

Valley, Calif, Callinan opened another BDCA for that office.
'What I like about it is, the money can earn dividends, even for a few days,' Callinan says. 'My savings are flexible— there are no restrictions on putting them in or taking them out.'

In 1997, Callinan opened an additional business checking account to hold funds for his company's 401 (k) plan, giving him the potential to earn dividends prior to depositing them with the plan's administrator.

Because of Silicon Valley Microelectronics' continuing expansion into the international market, Callinan's CPA suggested he launch a Foreign Sales Corporation (FSC), which is a legal entity set up under the Internal Revenue Service code to give tax benefits to U.S. exporting firms. Callinan opened yet another BDCA in conjunction with the launch of his FSC, so he can generate money market fund account earnings on this money as well.

Callinan plans to continue to take advantage of the expanding worldwide demand for his product. 'Wells Fargo has helped our company grow in every possible way,' Callinan says. 'They've been a huge financial resource for us.'

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