Searching for Capital
A broker assesses the small-business lending market.
Every successful company I know shares a common ingredient: a leader who is an entrepreneur and who is irrationally committed to the company’s success. These people will duck, dive, dodge, twist and turn to live to fight another day and make their dreams and visions come true.
I can relate to these struggles because I am trying to do the same thing in my loan brokerage. Occasionally, there are moments when the entrepreneurial flame is tested and you become despondent and concerned. Then you forget about your moment of rationality and get back to work.
Over the past few weeks, I have been working with two clients whose flames are flickering. Both have owned their businesses for more than 25 years and the Great Recession and its aftermath have not been kind to them. One is in a wholesale business, the other, in construction. One has a loan with a private lender and is paying an all-in rate with fees and interest of about 22 percent. The other has a line of credit that has been frozen by a Federal Deposit Insurance Corporation-insured bank that is threatening to foreclose on his properties.
The wholesale client had an option to sell his business to a bigger company and go “work for the man.” No suitors are knocking on the contractor’s door – he faces closing the business some 50 years after his dad started it.
Remarkably, though, there are loan options for both of these businesses. The wholesale company might be able to take advantage of a Small Business Administration CAPLines loan. The contractor might be able to separate his real estate holdings into a different corporation, refinance his debt and then factor his receivables.
These are tactical solutions. The question is, do the owners still have it in them to live to fight another day. Or are they too tired? Have they had enough? Only they can answer these questions.
I put the new lender on the phone with the wholesale company’s owner and chief financial officer. The C.F.O. adamantly stated, “This won’t work.” He wanted to sell. I called the owner back to ask him if he was sure. “This gives you a chance to live another day,” I said, “if that’s what you want.”
More recently, I sat down with the son and the dad at the contracting company. I asked them point blank, “Do you want to try to save your company?” If the answer is yes, let’s explore Plan A. If no, Plan B. Today, it might be Plan A. Tomorrow it might be Plan B. They’re the only ones who can make the decision.
At first, the wholesale owner was certain he wanted to sell. Recently, he changed his mind and we’re back on the job. His inner flame was back.
Sometimes in this job, I feel more like a therapist than a loan broker. Does your flame ever flicker?
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/2012/12/03/watching-the-entrepreneurial-flame-flicker/?partner=rss&emc=rss
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