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Chances are, if you have been to an amusement park in recent years, you have come into contact with the work of Alvaro Villa. His company, AVG Inc., designs and manufactures amusement-park rides. Despite a solid track record and high-profile clients, AVG is still considered a high-risk operation by many lenders. Because AVG’s products are so customized, they would be virtually impossible for the bank to resell to another customer to satisfy the loan in the event of a default. Villa spoke with Karen Teitelman about the problems of obtaining financing for a business considered to be risky.

I founded the company in 1978. We specialize in manufacturing audio animatronic figures for amusement-park rides. In some cases we design the whole ride itself. We have clients both here and overseas. Most of our overseas clients are in Asia we do work in Japan, Korea, China, Taiwan and Singapore. Most of the time, our work is divided evenly between the U.S. and Japan.

One of the biggest problems we have had is getting funding for our business overseas. What happens is, we will get a letter of credit for the cost of the work, to be honored upon completion, or upon delivery of the goods. Because we do things that are very customer-specific, and not like general construction work, it can be very difficult to get bonding. We need to find a bank that will feel good about our capacity to fulfill the job, and that has been extremely problematic. The banks will frequently balk at the nature of the job. We had one job for Japan where we had to build a bunch of dinosaurs, and at the time, the banks were questioning that as being very risky.

We did a project in Korea with a letter of credit and it cost us a great deal more than it should have, because of banking problems. Because of the specific nature of the project, it was considered very high risk by the bank, even though we have a very good track record. We hardly made any profit and this was a highly significant project in Korea.

Then we discovered the Export Small Business Development Center. We started working with them in 1994, just after the Northridge earthquake. It’s unbelievable the amount of help we have gotten from them. And it costs us nothing, they are completely not-for-profit.

A customer will give us a down payment, and will pay us again in, say, six months, based on receivables. But we have to go somewhere else to get funded in the meantime. The Export Small Business Development Center acts as middleman, finding us the institutions to fund our projects, and in addition, helping us with all the paperwork that is involved. I cannot say enough about how much they have helped us.