Stearns Bank Acquires Majority of Contract Capital Corporation

St. Cloud, Minn. (September 13, 2023) – Stearns Bank N.A., a financial institution in Minnesota, has acquired a majority stake in Contract Capital Corporation (CCC).

CCC provides specialized financing services to Managed Service Providers (MSPs). In addition to Stearns Bank acquiring a majority interest in CCC, Stearns Bank is well-positioned to provide additional capital for CCC to take advantage of the extensive market opportunities for growth and diversification in the Information and Communications Technology (ICT) industry.

CCC has developed specialized expertise in the fast-evolving ICT landscape as middle market and growth companies opt to deploy their capital in growth investments and acquisitions rather than investing their hard-earned capital into owning and self-managing their technology assets. With the increasing dependency on the most up-to-date technology and high-security data centers, CCC carved out a financing niche for MSPs offering the most evolved technology-as-a-service model. This financing allows MSPs to install, service and manage the mission-critical technology equipment, communication systems, and secure data centers for middle-market and growth companies as they move away from committing capital to own and self-manage their technology to the technology-as-a-service model.

As ICT undergoes this shift in client preferences and these companies continue to preserve their capital for growth opportunities – MSPs with maturing “as-a-service” models will look to the unique financing that CCC provides to maximize their market share given the ever-increasing dependency on the most up-to-date and secure ICT.

CCC’s specialty financing services add depth and diversification to Stearns Bank’s already strong nationwide financing capabilities, pairing particularly well with Stearns Bank’s nationwide equipment financing division.

“We see this venture as an opportunity to propel CCC’s growth and build upon our current expertise, further diversifying our nationwide commercial lending and equipment financing capabilities,” said Kelly Skalicky, President & CEO of Stearns Bank N.A. “Our growth strategies include a focus on partnering well with like-minded, visionary entrepreneurial leaders like Chris Kerr and Rob Howe who developed decades of specialized expertise in the ICT industry and strong MSP relationships and were ahead of their time and the industry in discovering CCC’s financing niche and the explosive growth opportunities in ‘as-a-service’ models for technology suppliers and providers, like MSPs.”

While conventional capital sources are an option for MSPs, often these choices are not effectively scalable which frequently leads to a cash crunch, or the need to dilute ownership through an equity raise. CCC seized upon that gap and opportunity to provide much-needed niche financing for MSPs well-positioned to scale and grow.

“Through our prior experience in conventional asset financing for the ICT industry, we have seen the challenge MSPs have when sourcing capital for an as-a-service practice,” said Chris Kerr, CEO of the Contract Capital Corporation. “With the stable backing of Stearns Bank, and their willingness to innovate, together we can help more MSPs to scale their business.”  

In this ever-evolving technological landscape, where the cloud-based industry and managed services are flourishing, technology system updates and cutting-edge cybersecurity are essential for most every business, rather than a nice-to-have luxury for only the largest businesses.

“The secret to achieving success lies in collaboration and partnering smart with experts in the field, which we are confident we have done with Chris and Rob and their CCC team,” Skalicky said.

 “We are thrilled to embark on this exciting venture with Contract Capital, as it perfectly complements our passion for innovation and our core value to continuously evolve, adding another niche financing specialization to our national lending program that repeatedly yields strong, industry-leading earnings for Stearns Bank year after year,” added Skalicky.

CCC was advised by Hovde Group, LLC and the law firm of CP LLP. Stearns Bank was advised by the law firm of Stinson LLP.

About Stearns Bank N.A.

Minnesota-based Stearns Bank National Association is a $2.2 billion, independently owned financial institution with locations in Minnesota, Florida and Arizona, and over 35,000 small business customers nationwide. Recognized as having a bullet-proof balance sheet with 25% capital and earning top rankings as one of the nation’s highest-performing banks by American Banker, and most recently ranked fourth in the U.S. among banks having more than $1 billion in assets by Independent Banker’s 2023 Best of the Best ranking of banks with the highest 3-year average Return on Assets, Stearns Bank specializes in nationwide affordable housing, workforce and multifamily housing, commercial construction lending, build-to-suit and CRE-repositioning lending, family office and lender financing, USDA and SBA lending, and small business and equipment financing. As a national leader for nonprofits, Stearns Bank offers its customized suite of Nonprofit Banking Solutions specially designed to empower nonprofit organizations across the country. Driven by a passion to help others achieve their greatest ambitions, Stearns Bank’s mission is to Get the Job Done! For more information, visit StearnsBank.com.

About Contract Capital Corporation

Established in 2019 as a wholly-owned U.S. subsidiary of Contract Capital Inc., Contract Capital Corporation provides contract-based financing services to cloud-based and managed service providers (MSPs). Contract Capital is purpose-built to address the challenges MSPs face while scaling a services-led recurring revenue model. With a mission to be a growth partner, delivering on the terms of a modern ICT marketplace, Contract Capital Corporation advances the capital needed to drive more client success through outcome-driven, subscription-based services.