Business innovation runs deep in Fairfield and Westchester counties, which is essential to 
launching a business and growing it from a startup operation to an established and stable enterprise. However, for many business owners, the next step in the growth process ”” expanding or diversifying their business operations ”” can be the most challenging.
Small and middle-market businesses know their businesses well and they know where they want to take them. What they might lack is the knowledge of all the available tools that can help them successfully grow their businesses. Here are a few ideas for innovative business owners who are looking to take the next step in their growth.
TAPPING ASSET-BASED LENDING
As its name suggests, asset-based lending, or ABL, is borrowing secured by an asset. This asset could be a company’s accounts receivable, inventor and equipment, but it mainly means lending to businesses using assets as collateral.
By properly assessing the value of a borrower”™s assets and closely monitoring them, an asset-based lender can often make loans even if a business”™ financial metrics do not quite meet traditional underwriting guidelines and ratios. In many instances, lenders can use ABL to overcome modest weaknesses in a borrower”™s financial profile to extend lines of credit which provide essential liquidity, precisely when a growing company needs it most.
LOOK TO LEASE RATHER THAN BUY
Leasing equipment, particularly technology-oriented assets, can be a short-term solution when equipment is needed to keep up with demand but you cannot spare the funds for the down payment needed for traditional financing.
By leasing, rather than buying needed equipment, business owners can preserve cash and capacity on lines of credit for other purposes. Leasing can give business owners access to the latest equipment available, thereby streamlining processes and boosting productivity. Leasing also enables business owners to align contract terms to match the equipment”™s anticipated useful life and provides flexibility forupgrading and replacing equipment on an
as-needed basis.
CONSIDER THE SMALL BUSINESS ADMINISTRATION
While this government agency concentrates its efforts on small businesses, most of its programs can also assist what we might consider midsize businesses.
SBA-guaranteed bank financing, wherein the government offers a granting bank a guarantee on the repayment of a major portion of the loan, offers smaller businesses several important advantages over traditional financing. Among these are more liberal requirements about collateral and equity, which can be very helpful for a growing business. A company must be independently owned and operated, not be dominant in its field and must meet SBA employment or sales standards for different business types to qualify for an SBA loan.
The SBA provides financing through “preferred lender” banks. A preferred lender is one the SBA selects for its business lending expertise. Preferred lender banks can make certain loans without prior approval from the SBA, as well as provide preferential processing. KeyBank is a preferred SBA lender and frequently uses SBA criteria and procedures to grant SBA-guaranteed loans for purposes such as constructing owner-occupied buildings, purchasing existing buildings, buying equipment, financing increases in inventory or receivables and providing working capital.
STREAMLINE PROCESSES
Managing growth often comes down to managing resources, so the best and largest effort targets the most pressing and profitable opportunity. Tapping your bank for help with treasury services can pay off regarding optimizing time and money spent managing payments.
Effective treasury service programs enable business owners to monitor account activity, quickly access information, collect funds more promptly via lockbox or automated clearing house (ACH), and streamline payments processing via ACH and wire transfers. These programs can also help to protect assets with tools that can detect and prevent fraud.
In short, there is no one way to manage growth, but there are many ways business owners can tap their bank for tools and insight to help achieve their business objectives.
Steven Hoffman is KeyBank senior vice president and business banking sales leader for upper Hudson Valley and Fairfield County in the bank”™s Tarrytown office. He can be reached at 914-333-5724 or by email at steven_hoffman@keybank.com.
