It was one of those career-defining moments.

Matthew Holowinski had been a top performer for Avis Rent A Car at Chicago’s O’Hare Airport. He had even turned down a manager’s position, realizing he could make more money remaining as a sales agent. He did, however, accept Avis’ offer to become an independent operator in a new location in Skokie, a suburb of Chicago. He built the store into a $1 million earner.

Some 12 years later, he sat thinking something was missing. “It was time to move on,” he says. “At one point you ask yourself, ‘What do you do best in life? What do you like to do?’ I decided the best way for me was to get out of the nest, spread my wings and try to create something from scratch on my own.”

Holowinski opened his own car rental company in 2008 with a lot of determination and one car—an eight-year-old Ford Focus bought for $3,000. The decision to go completely independent as opposed to buying into a franchise system was predominantly financial, as getting a loan for the licensee start-up fees was a stretch for him at the time.

He named the company Greenberg Rent a Car, the translated name of his hometown in Poland. “I wanted to open this company so bad; I said, ‘I know I can do it,’” he says.

Learning the Market
Holowinski originally wanted to open in Chicago, but he had difficulty getting the permits and the business license. That turned into a blessing in disguise. He found a small office in Norridge, two blocks from Chicago’s city limits. Norridge pays 8 percent less tax than its neighbor, a boon Holowinski uses when marketing his services.

Aside from his humble Ford Focus, Holowinski’s idea was to create a luxury car rental company. He bought a Lexus LS 460 and tried to stir up business in places such as Signature Flight Support, a fixed base operator that handles corporate and VIP travel out of O’Hare. He couldn’t crack the market.

He turned in the opposite direction when he began to realize the growing market of credit-challenged renters with a need for basic transportation. Those renters are often declined at the major car rental companies, as cash deposits are subject to a credit check.

Holowinski called his competition directly and told them he’d rent to their declined clients, and even pick them up. “I told them, ‘We want who you don’t want. Give us a call if you have a customer who is stranded,’” Holowinski says. “That’s how I started to grow.”

Holowinski or his employee, a friend from his days at Avis, brings a laptop and a printer when delivering vehicles which allows them to create the contract anywhere. Customers appreciate the attentive service and even come back to Greenberg to rent after their credit problems have been solved.

Though business came, Holowinski knew the cash market was risky. He got burned. He tinkered with controls such as a 30-year-old age minimum and customer screening. He even put GPS tracking devices in all the cars. The problem was not necessarily collecting payment, but damage to the cars.

One change made the difference—Holowinski now only allows cash rentals with a debit card. Those renters usually don’t have a credit card, but they at least have passed their banks’ requirements and can be traced. “The bank is doing all the work for me,” he says.

“When we stopped doing cash rentals, we stopped having problems,” he says.

At this point, the market for debit card customers is greater than he can fulfill. “I’m getting calls from 10 people a day that I have to turn down because I don’t have cars,” says Holowinski, figuring demand is so great he would need three times the fleet size.

What’s standing in the way of growth? “I’ve had a hard time getting financed,” he says.

Patchwork Funding
It’s tough being a startup, especially when banks want to see two years of operation before considering a new client. Forced to get creative, Holowinski grew his fleet through a patchwork of funding sources.

He used a loan from Volkswagen to buy three cars and bought two more on a personal loan. For the Lexus, a dealer put him in touch with Titus Leasing, a company that specializes in the livery industry. Titus agreed to lease him the Lexus. When Holowinski had problems getting a loan from the captive finance companies, he returned to Titus.

He has created a Dun & Bradstreet profile to help him obtain a credit line with traditional car rental funding sources.

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Keeping Them Honest
Greenberg’s 19-car fleet is a mix of compact, midsize and full-size cars, two trucks and a van. The varied OEM mix consists of Lexus, Honda, Kia, Ford, Chrysler, Chevy, Dodge and Volkswagen.

Holowinski has a Smart car convertible, though the novelty has worn off and renters are staying away. He’s looking to sell it. Hybrids are in his plans.

Holowinski matches the unit’s weekly rental rate to its monthly lease payments. He plans to run the cars from 70,000 to 100,000 miles. Older units might be kept in fleet but transferred to higher risk clientele.

The tracking devices ($220 each, $120 to install) keep renters honest. Holowinski says 15 to 20 percent of rentals have had to be deactivated at some point. The “trust game” can only be played so often—if the renter does not respond to repeated phone calls, Holowinski will shut a car down the same day it is due back. And he’s not afraid to repo a car.

“When they call, they tell us they’re on the way to the bank to get the money,” he says. “They don’t mention that the car won’t start.”

Holowinski insures through Philadelphia Insurance. He doesn’t sell CDW because his fleet is too small, and his customers are higher risk. He’ll ask for the renter’s insurance, “but if they don’t have it, we see how they are.” Dents and dings are often covered internally.

To keep costs down, Holowinski has wholesale accounts with Tire Rack and auto parts stores and has established relationships with independent body shops.

Marketing is minimal. Most of his business comes from referrals and most of the time he’s sold out, though he does keep a Yellow Pages advertisement that works for him. Most clients are on weekly rentals; close to 50 percent of Greenberg’s customers keep the cars for almost six months. This alleviates the need for a reservations system right now.

“The puzzle is starting to make sense,” he says . “The more time I spend in this business the more connections I have. And I know where to go to correct the problem.”

Fighting for a Future
Holowinski has yet to turn over his fleet, so it’s hard to project if he’s profitable. Losses on cash rentals have cut into his bottom line.

He understands that a 19-car fleet making $1,000 to $1,100 RPU does not leave much on the table after car payments, insurance, maintenance, rent and salaries.

“My market is outstanding,” he says. “But in order to survive and grow, I have to increase the fleet.”

If he can build a bigger fleet, Holowinski seeks to hire a staff and move out of his office to a location with a storefront, more traffic and a place to clean and service the cars. He would consider a franchise.

“Right now we’re discovering our costs,” he says. “Real profits will be in the future, and I know that.”

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Getting Creative with Funding

When Matthew Holowinski of Greenberg Rent a Car had a hard time securing funding for his fleet, he turned to Titus Leasing (www.titusleasing.com), a small, independent lessor specializing in the livery industry.

Titus has financed 14 cars for Greenberg. The leases are three- to four-year open-end leases with a dollar buyout, though a lease would be written specific to the situation, according to Judy Conrad of Titus Leasing. Titus requires a 10 to 20 percent equity stake in some of the vehicles.

ARN: Funding a startup business can be tricky. What factors increased your comfort level to work with Matt Holowinski?
Conrad: Matt previously worked for a rental car company, so he had experience in the industry. He had a solid business plan and pro-forma; his credit was good and he had some down-payment money to invest.

Would you work with another car rental company?
Yes, as long as they can meet our credit criteria. They must complete a credit application and be able to provide two years of business taxes (if they have been in business that long) and two years of personal federal taxes. Their credit report must be fairly flawless, unless they have a good explanation or backup documentation for negative information.

How are the needs of a car rental company different than those of a limo operator?
Insurance is the biggest issue. Many companies that write insurance for car rental companies do not want to list an additional insured on the policies. When this is the situation, we cannot lease to that car rental company. Limousine operators have drivers that are listed on their insurance policies. Rental cars have a different driver all the time.