Searching for Capital
A broker assesses the small-business lending market.
Sunday night, I packed my bag and broke my own rules by dusting off my navy suit and a tie for what I feared would be another day of Washington blather. And then on Monday, I participated in what was billed as the Capital Access Innovation Summit, which was sponsored by the Small Business Administration and the Department of the Treasury. It was not what I expected.
In the morning, the plenary sessions featured bankers, government leaders, corporate executives, and alternative lenders sharing their carefully scripted messages with a group of about 150 of us who had gathered for the day. We were an interesting mix of small-business owners, S.B.A. officials, Treasury officials, bankers, alternative lenders, academics and various other folks in the small-business finance community. I was genuinely impressed by the group.
Among those I met were a few people and companies I had not previously encountered. Lending Club, for example, was there to discuss its plans to start financing small businesses over the next few months. If the plans come to fruition, it sounds as if the company will be lending at an annual percentage rate between 9 and 10 percent, which is a fraction of the price being charged by some of the current alternative lenders who also attended the event.
I enjoyed meeting the leader of the American Dream Fund, which has built a platform that matches entrepreneurs with various local and state grants and funds that can be tough to identify and find. And I was fascinated to meet the chief executive of a company, North End Financial, that provides collateral to banks that make loans to small businesses of less than $200,000. This is similar to the idea of a collateral exchange that I have blogged about.
The rhythm of the day changed dramatically in the afternoon when attendees got to choose break-out sessions. These offered conversations on many different topics. I think for the first time I appreciated some of the challenges that the political appointees struggle with as they try to drive change. I realized that many of them suffer frustrations similar to my own.
The discussions had a different vibe. Instead of contributing to an us-versus-them confrontation, we all rolled up our sleeves and tried to figure out the right things to do. It was nice to see Jacob Lew, the Treasury secretary, come into some of these sessions and listen intently. Some of my favorite discussions concerned the powerful economic impact likely to result if large corporations would simply pay their small-business suppliers faster and free up their cash flow. A program like this would be about Americans helping Americans, and might not require any legislation or tax policy.
I was also impressed by the conversation about the marketing challenges facing the S.B.A. The agency offers many programs that could work wonders for many small businesses — at rates that are reasonable and affordable. Unfortunately, many small-business owners either don’t know about these programs or they don’t know how to find lenders that facilitate them. My hope is that the sexiness of the new alternative lenders, many of whom played a role in the conference, will not overshadow the more traditional programs that offer lower rates.
After some of my previous trips to Washington, I felt as if I had wasted my time. I left frustrated, wondering why I had bothered to make the trip. This time, as I took off my jacket, loosened my tie, and walked back to my hotel, I felt different. I hope the feeling lasts.
Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.
Article source: http://boss.blogs.nytimes.com/2013/06/14/not-just-talking-the-talk-in-washington/?partner=rss&emc=rss