Companies that experienced a few bumps in the road over recent years are starting to ride a little bit more smoothly, but need some road side assistance to help them get to where they’re going.
“Business owners say no one is lending but it’s because they don’t know who the players are that are willing to take the risk,” said Valery Belloso, business development officer for Accion San Diego. She made the comment during an executives roundtable discussion held recently at The Daily Transcript. the roundtable was sponsored by North Island Credit Union.
Kurt Chilcott, president and CEO at CDC Small Business Finance Corp, said the term “discouraged worked” can be used similarly to describe a discouraged small business.
“They’ve been turned down by banks, they’ve had bad years, they’re not quite sure if they’re ready to jump back into that again,” Chilcott said. “Maybe they’re surviving OK. We’re interesting in helping them expand and hire more people. They might not quite be ready for that. There’s a lot of shell shock from the last few years that’s still evident across our small-business community.”
Bud Gminski, president of Multi-Image Productions, Inc., experienced a big drop off in business after 9/11. His company’s “bread and butter” – live events – were suddenly canceled and corporations didn’t bring them back right away.
“And for a while they weren’t doing things, which meant our business shrank and we had to completely reinvent ourselves,” Gminski said. “And that’s when these guys came in – when we had to retool and more or less start over from a new level of business. We had to shrink in size; we had to have a new plan going forward and it became very difficult.”
Gminski said his company’s lending limits were changed, but he met with Bob Reck, first vice president of business services at North Island Credit Union, who helped him get some well-needed financing.
Partnerships between traditional lending institutions and organizations such as Accion San Diego, the Small Business Development Center, CDC Small Business Finance Corp and California Southern Small Business have helped businesses like Multi-Image Productions and Copy Link, Inc. achieve the financing they need to keep moving forward. When business owners can’t qualify with North Island Credit Union, the credit union can turn to Marvin Groner at Cal Southern to guarantee the loan, or Accion and CDC, which offer alternative lending options.
“They are viable companies and just need a second look and reinforcement, so our guarantee is kind of structured to provide the lender that support and lower their risk, and then provide a source for the businesses to keep going forward,” Groner said.
Reck said a business came to him recently that he felt he could lend $25,000 to $30,000.
“But if we can get a little help from Cal Southern, we could maybe lend $150,000 to $200,000 and help this business. It was a business that was growing. They had a leap in sales and they needed more capital, but they just couldn’t quite qualify for what they really needed versus what we were willing to lend,” Reck said.
And with Gminski’s company, Gil Espino, vice president of business services for North Island Credit Union, said, “We liked the business, the trends were moving in the right direction at this point, but mentioned that he had some hiccups down the line. So we had to look for some support from Marvin and the Cal Southern State Guarantee Program, which they provided a lot of support for us.”
Business has already doubled for Groner in fiscal year 2013 compared to 2012. Last year, Cal Southern had 32 loans for about $6.6 million, and year-to-date for this fiscal year, it’s already at 41 loans for $12.8 million.
Cal Southern has experienced an increase in activity with the lenders it’s working with, Groner said. That includes community based lenders, CDCs and Accions that are doing loans for the businesses.
Valery Belloso, business development officer at Accion San Diego, said production at Accion has also picked up.
“I think in general, it’s just the void that existed in businesses that used to be able to access traditional financing were no longer able to. So that opened up a larger target market for alternative lenders like Accion and CDC,” Belloso said. “It could be for insufficient time in business, it could be due to past credit challenges for the business owner themselves or maybe declining trends due to the recession that has made it not an ideal situation for a traditional lender to take the risk now – but maybe down the line.”
“As we all know, the No. 1 thing that businesses struggle with almost throughout their whole existence is financing,” said Teresa Skrepenski, management consultant and special projects coordinator for the San Diego and Imperial Regional SBDC
Kevin Marshall, president of Copy Link Inc., said he’s spoken to owners over the past few years and people have been worried about their lines of credit being taken away from them.
“Money is so important to small business. It’s sort of like the heart of the business. If your heart wasn’t pumping your blood through your body, you’d be dead. Blood is very important, but if blood isn’t circulating through your body, it’s not going to do you any good. Same thing with money in the business,” Marshall said.
The collaboration between local organizations affords businesses the opportunity to find those micro loans that they may not have otherwise known about. Susan Lamping, senior community loan officer for CDC Small Business Finance Corp, said she has worked with the Foundation for Women, La Maestra Foundation and the International Rescue Committee, which over micro loans from $500 to $1000 to a few thousand dollars.
“We work to sort of step people through our system,” Lamping said. “One loan I did when I used to work at Accion 12-plus years ago, I did a loan for a vitamin distributor for $3,000. That was his first loan. He and just started distributing vitamins and after five or six loans, his most recent loan was a project of $650,000 to buy the manufacturing company and be the manufacturer. We really took him through our system of multiple organizations, working with the small-business development center, working with other business mentorship organizations.”
Valery Belloso, Business Development Officer, Accion San Diego
Kurt Chilcott, President & CEO, CDC Small Business Finance Corp
Gil Espino, Vice President of Business Services, North Island Credit Union (sponsor)
Bud Gminski, President, Multi-Image Productions Inc.
Marvin Groner, Senior Vice President & Chief Credit Officer, California Southern Small Business Development Corporation
Susan Lamping, Senior Community Loan Officer, CDC Small Business Finance Corp.
Kevin Marshall, President, Copy Link Inc.
Bob Reck, First Vice President of Business Services, North Island Credit Union (sponsor)
Teresa Skrepenski, Management Consultant/Special Projects Coordinator, San Diego, Imperial Regional Small Business Development Center
2448 Historic Decatur Rd. Ste., 200
San Diego, CA 92106
June 5, 2012 -- Kurt Chilcott, president and CEO of CDC Small Business Finance, discusses a variety of small business loan programs.
Oct. 7, 2010 -- Executive Editor George Chamberlin and Kurt Chilcott, president and CEO of CDC Small Business Finance, discuss the recently passed federal small business legislation.
June 15, 2009 -- George Chamberlin talks to Kurt Chilcott, CEO of CDC Small Business Finance, about small business financing and the current economy.