June 1, 2011

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Jumping Through Hoops

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Jumping Through Hoops

Small Businesses Work Harder for Commercial Loans

Denver Brightly

June 1, 2011

A New Game Plan
Establishing relationships and sticking with them certainly paid off for Maxine Turner. When she founded Cuisine Unlimited 35 years ago, she felt her food catering business needed relationships with multiple banks. Hence, she set up accounts with Zions Bank, Key Bank and Wells Fargo. Those relationships became extremely important in 2008 when the Great Recession hit.

“It felt like we had just jumped off a cliff,” she says. The company had work lined up six months out, but suddenly saw its catering of corporate lunches and breakfasts—essentially anything centered around food services—come to a screeching halt.

Recognizing the dire business climate, Turner put together a new game plan and called a meeting with her three lending partners. “We told them our game plan and what we intended to do. I think we put any concerns they had at ease,” she says. Subsequently, none of Cuisine Unlimited’s loan terms were changed and the lines of credit were not reduced. However, Turner says she did try to renegotiate the interest rates on her credit lines—“and they [her banking partners] were very accommodating.”

Despite the fact that her lending relationships were still intact, business was not all crème de la crème for Cuisine Unlimited after the recession hit. Turner had to scale back her staff from 110 employees to 60. Further, she cut purchasing and went back to her 1995 business plan in order to run the operation more efficiently.

The plan worked. Earlier this year, Turner held another meeting with her three lenders to give them updates on how her business is progressing. “I think that line of communication has given them confidence in us,” she explains.

Nevertheless, Turner believes the good experience she has had with her lenders is not the order of the day for other businesses trying to borrow money. As a national advisory board member for Key4Women, an organization for women business owners, Turner says she has heard major concerns from other women who say the credit market has not completely thawed.

“Other businesses in the association say it is impossible to get money,” she says. “I think money is still tight. And I hear often that the lending criteria are much more rigid than in the past, and that banks have not eased up—although that hasn’t been my experience.”

To be sure, Cuisine Unlimited has recovered nicely since the recession began. In fact, Turner was able to parlay her lending relationships to open a new regional office in Park City, taking advantage of depressed rental prices in order to expand Cuisine Unlimited’s market now, rather than waiting a year. Furthermore, her company has landed catering work for the 2012 Olympic Games in London and has made multiple trips there working on projects.

“We are self-financing this work and don’t foresee that we will need to go to our banks for loans, but I am confident they would welcome us if the need were there,” she says.

Hands-on Lending
Back at TAB Bank, Myers says he sees signs the economy is picking up, but such improvement hasn’t necessarily helped businesses in search of loans or credit lines. Eighty percent of TAB Bank’s growing portfolio involves accounts receivable financing or asset-based lending—what traditional lenders consider “messy collateral,” he says.

“We provide working capital solutions to transportation and non-transportation companies in all stages of the business life cycle, during all economic conditions, through accounts receivable financing, lines of credit, equipment loans and asset-based loans. We lend on what has actually been sold by the business and can do loans from $1 million up to our legal limit of $12 million to get the cash flow going.”

Moreover, Myers says TAB Bank is “very involved” with its customers. “We talk to them every day and know what’s going on inside their businesses. It’s a labor-intensive type of lending that most banks don’t want to do, because it takes a lot of training and knowledge to manage the collateral, but we don’t just lend money. We actively help our customers collect on their invoices.”

That’s all fine with Rudick at SanSegal Sportswear. For this $18-million-a-year business, favorable terms on a fresh line of credit and a bank that helps collect on invoices is just the right kind of partner to have.

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