Session 7: Small Business Support Services
Thursday, July 17, 1997
1:15 - 2:30 pm
- Fran Hanson, Small Business Association
- Woodrow McCutchen, Howard University Small Business Development Center
- Thomas Wren, Pennsylvania Small
Business Development Center
- Don Clarke, Asset Based Lending Consultants Inc.
- Sean Hough, Key Bank and Trust
- Ed Weiler, U.S. EPA
Speaker 1: Fran Hensen, Small Business Association
Ms. Hensen has worked with the
small businesses extensively since 1974, first as a Servicing Loan Officer
in the Portfolio Management Division, and since 1985, as a Commercial
Lending Officer in the Financing Division. She is presently the Chief
of the Financing Division, responsible for processing applications as
well as the day-to-day administration of the division.
SBA offers two loan programs for small business which can be used for most purchases (items, land, building, inventory, even debt restructuring): 7-A Guarantee Program (for new businesses) 504 Program (for mature businesses; a fixed asset acquisition program) Both programs involve commercial banks issuing the loans.
SBA also has a short-term lending or line of credit program. Contract lines of credit apply to businesses that want to sell to the federal government, and are keyed to the term of the contract with the government (usually one year). Seasonal lines of credit apply to businesses that have cyclical needs. In addition, SBA offers a line of credit for small general contractors.
SBA also offers free counseling for small businesses who are considering the loan process. Visit SBA's web site [http://www.sbaonline.sba.gov/] .
Speaker 2: Woodrow McCutchen, Howard University Small Business Development Center
National Small Business Development
Centers (970 locations nationwide) provide one-on-one business counseling,
training, educational workshops, and conferences (all free or low cost).
The centers work with the federal government (SBA), institutions of higher
education, state and local governments, private businesses, and chambers
Speaker 3: Thomas Wren, Pennsylvania Small Business Development Center (SBDC)
Mr. Wren serves as the Program
Manager for the Southeastern Pennsylvania Procurement Technical Assistance
Program. The SE-PA PTAP has locations at Temple, Lehigh, and Kutztown
Universities and serves a nine county area in Southeastern Pennsylvania
providing assistance to business enterprises desiring to market their
product and services to the federal, state and local governments.
SBDCs run Procurement Technical Assistance Programs (PTACs). The mission of the PTAC is to provide procurement technical assistance to business firms interested in doing business with the government. The program is funded by Congress.
Services offered by Pennsylvania SBDC:
- Bid matching service
- Assist in locating government procurement activities
- Provides one-on-one counseling on procurement matters
Speaker 4: Don Clarke, Asset Based Lending Consultants
Mr. Clarke is the President and
Chairman of Asset Based Lending Consultants, Inc. headquartered in Halldale,
FL. Formed in 1988, ABLC, with regional offices in New York, Chicago,
Los Angeles, London and Miami, is a corporate financial consulting firm
with most of the major United States banks as clientele. ABLC provides
technical assistance on corporate loans (mostly asset based transactions)
and in fiscal year ended 12/31/95, assisted banks on loan aggregating
$5 billion worldwide. Mr. Clarke received a BSBA in accounting from City
University of New York in 1974.
Asset Based Lending Consultants is a corporate financial consulting firm. The company deals primarily in asset-based transactions for its bank clients. Mr. Clarke presented the idea of asset-based lending as a means to grow a business through borrowing by leveraging the company's assets. Through this mechanism, a business can get necessary financing through loans rather than venture capital.
The differences between these two means of financing a business' growth are as follows:
- Loans Capital
- Fluid situation, moves with size of assets static
- Some service fees surrender portion of ownership
- Can repay anytime
- Shared earnings, shared control
- Higher loan-to-equity ratio
- Majority control?
Banks that offer asset based lending include Chase, GE Credit, and most major banks and community banks, as well as finance companies.
Speaker 5: Sean Hough, Key Bank and Trust
Key Bank and Trust is a community
bank that specializes in small business lending and offers asset-based
Questions & Answers:
Q: What is bringing about growth in asset-based lending
A: (Hough) Companies that offer asset-based lending are willing to take more risk than banks; higher risk, higher return.
A: (Hanson) SBA fills a niche between asset-based lenders and banks in terms of the level of risk SBA will accept.
Q: Can the Procurement Technical Assistance Program help with PRONET and ARNET?
A: (Wren) Yes, PTACs offer that service.
Q: What if a recycling-based company (i.e., a company that uses recycled product or waste as an input) folds and the lender is left with an "asset" that has not value or with very specialized equipment?
A: The company could have a supplier hold some paper, which makes the deal more attractive for a bank. A loan can be structured to address the lender's concerns about risk and provide the necessary cash to the recycling-based company.