Memphis Electric, with help from a $1 million LISC small business loan is seeking larger contracts, reducing reliance on factoring, and upskilling staff. The company is helping build a stronger network of diverse suppliers nationally to support a greener economy.
When Donald Thomas retired from military service in 2016, he began volunteering as an electrician as he returned to civilian life in Memphis, TN. He found the work immensely therapeutic and decided to turn it into a second career by founding his own licensed union electrical company, Memphis Electric.
Today, Thomas and his team build and renovate electrical systems ranging from building management networks to telecommunications for a diverse range of clients including the Veterans Administration, community centers, and even a local animal hospital.
Promoting environmental sustainability is also high on Thomas’s list of priorities. Memphis Electric is developing charging stations to support home power outages and has a contract with an American car manufacturer to produce electric vehicle batteries at a battery plant currently under construction. The company is also introducing green infrastructure to existing buildings including lighting retrofits. When renovating lighting in an older structure, Thomas often recommends LEDs to keep costs and energy use down. “It’s our sweet spot,” said Thomas. “We advise folks to keep things simple yet efficient.”
Donald Thomas, founder of Memphis Electric Company LLC.
While some of Thomas’s projects focus on energy efficiency, invoicing made payment efficiency complicated for his business. In 2022, the company had 25 employees but was facing cash flow challenges. Without a strong banking relationship to support contract and receivables growth, Thomas turned to friends, family and receivables factoring for cash. To complete contracts, Memphis Electric worked with a factoring company to acquire quick cash to support operations, but it came at a cost; a 48% Annual Percentage Rate. It got to the point where the high interest was eating away at the company’s bottom line. Thomas knew he needed to make a change for the business to keep going.
While researching funding options that would better serve his business’ growth, Thomas found LISC.
LISC provided a $1 million small business loan to support Memphis Electric’s growth and reduce its reliance on factoring. This loan was supported by Truist, the Abbott-LISC Supplier Diversity Initiative, and the Entrepreneurs of Color Fund, funding sources specifically designed to support diverse small business suppliers.
“LISC small business lending is committed to helping small businesses grow and compete,” said LISC’s Tamara Underwood, who underwrote the deal. “This loan does just that, supporting a diverse supplier to build wealth and manage the cash flow gaps that occur with contracts where customer payment terms are long. Loans like this one build a stronger network of diverse suppliers nationally, which supports not only the business itself but also the growth of our economy as a whole.”
Thomas also worked closely with LISC’s small business underwriting team to identify the challenges facing his enterprise and choose the right financing solution.
Thomas now has the capital he needs to support contract growth and investments to expand his business and pay off a higher-interest line of credit. It makes a difference: projections show that Memphis Electric’s cash position will be twice as strong as if the company had continued using factoring.
What’s more, Thomas is using the LISC funding to upskill and train his staff: two employees are currently getting state certification to install solar panels. For Jay Bennett, a LISC business development officer who has helped guide Memphis Electric on its borrowing journey, that’s just one more plus to investing in entrepreneurs like Thomas. “Memphis Electric is not only providing union jobs and a union wage, but also investing in training a class of workers who can do the work to build a greener economy,” Bennett said.