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'Crafty' banking solutions sustain small businesses

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Paula Mello, CEO of Crafty Productions Inc., needed to find a way to fund her growing business, which designs and manufactures craft, jewelry and gift products for national retailers from Michaels to Wal-Mart. The company's celebrated design talent helped Mello to distinguish her business from other budding craft houses and land a banking partner that was poised to take the company to the next level.

Managing business cycles

A women-owned operation based in San Marcos, Crafty relies on Security Business Bank to create customized financing vehicles to support the company's seasonal selling cycles.

"We sell mostly dollar items in high volume," said Mello, who has grown Crafty into a multimillion-dollar company since its founding almost 20 years ago.

"Because we manufacture and ship the majority of our craft and gift items in advance of Halloween, Thanksgiving and Christmas, we needed a flexible financing arrangement that would allow us to manage the seasonality of our business."

Creative loan facilities

Companies that grapple with peaks and troughs in terms of selling cycles are encouraged to look into specialized debt tools to help manage their credit as well as their cash.

In Crafty's case, Security Business Bank structured an asset-based line of credit that incorporated a bulge facility during the company's busy selling season or bulge period.

"This customized financing instrument increases our credit line from May through August, when most crafters want our products, allowing us to manage the timing difference between payables and receivables. Our credit line then decreases after August once our items are shipped. So our borrowing is based exactly on the nuances of our particular business cycle," Mello explained.

Entrepreneurs who understand how their credit and cash cycles work are better able to make efficient financial decisions. Ideally, cyclical operations will wrap a financing structure around the individual business and its operation.

Supporting growth

"Security Business Bank has been adaptive to our needs as a growth-oriented company," Mello said. "The bank has increased our line of credit over the years as our customer base has expanded and our business has matured.

As an organization focused on creativity, we value the bank's ability to bring a variety of financing solutions to the table. A one-size-fits-all approach would not have worked as well for us," she said.

Security Business Bank evaluates its client businesses on a regular basis and makes recommendations on how to improve or modify financing arrangements to meet a set of pre-determined business goals.

"It's clear that the bank believes in our business and its potential," Mello said. "This is demonstrated not only through increased funding and customized solutions, but through great customer service day to day."

Savvy entrepreneurs will check in with their banking partners often to make sure they have the financial tools in place to help them stay competitive. An efficient and up-to-date financial structure will help growth-centered companies enter new markets, introduce new product lines, diversify a customer base and invest in the infrastructure required to ensure the long-term health of the business.

Submitted by Melissa Dennis for Security Business Bank

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