YOUNGSTOWN, Ohio – A partnership with a local, Mahoning Valley lender can help small businesses navigate both as startups and growing, expanding entities.
Local commercial lending experts say their institutions help entrepreneurs and business owners to access the funding they need to be successful.
Gregory L. Ensley, senior vice president, market president southern Mahoning Valley and commercial banking team leader at Farmers National Bank, says the team members act as advisers for those who want to start or expand a business, offering them guidance and tools, allowing them to fund and increase business activities.
Ensley suggests coming to lenders with an organized business plan that makes sense and is not outlandish can help them understand what you are doing.
He also suggests getting a credit check before coming to the bank, which avails the business owner time to get something removed or at least to be prepared when something is questioned.
“When you’re going to the bank, the more specific you are with the ask and not vague and generic” works best, Ensley suggests. “When you’re vague and generic, the banks get queasy. They want to understand the purpose of that set dollar amount.”
Josh Toot, executive vice president, Mahoning Valley market president, Premier/WesBanco Bank, says there are people in his department with 30-plus years of experience and their job is to work with business owners and help as many people as they can. Even as Premier Bank transitions into WesBanco, that is not going to change. The same folks will be making those decisions.
Toot says it is all about trust and communication with the bank.
“Banks want to know the bad news, not just the good news,” Toot says. “If you give us the bad news, we can help you try to get through it… maybe it’s the first time they’ve come across that hurdle. We’ve probably seen it 20, 30 or 40 times.”
Toot says the team’s experience has seen almost everything, giving them the insight to guide those seeking business funding in the right direction.
There is not really a checklist for getting a small business loan, but bankers are looking for industry experience, down payment, credit history and a plan.
Toot also suggests startup businesses talk to multiple banks to find the best fit, learn what they require, and then put together the business plan.
Founded more than 60 years ago by a few blue-collar employees of the Packard Electric Division of General Motors, 717 Credit Union continues to cater to small business owners, according to Brett Carnahan, 717 Credit Union vice president of Commercial Lending Management. While 717 loans can go up to $20 million, Carnahan says many requests are as small as $20,000.
“I think some other lenders in the community may not be as reactive to the needs of borrowers for the smaller loans,” Carnahan says. “We want to hear from these folks.”
717 Credit Union has an online resource that provides potential small business commercial customers with information about its lending products and what it is looking for before applying for a loan. Then they can start the process by going directly to a branch or through teleservices, which is followed up promptly by a phone or email conversation.
When businesses come for financing, Carnahan says the team is looking at not only their needs, but their business structure, financial statements, tax returns and other business filing documents. They also work with the business’s accountant, which can usually provide much of what is needed through an encrypted email.
“We do small loans that others kind of shy away from,” Carnahan says. “We can do large loans as well, but we don’t turn people away because their request is too small. But you do have to qualify… we can’t always be everything to everybody.”
WHEN A BANK CAN’T HELP
717 offers traditional commercial loan products, term loans, equipment loans, vehicle loans, commercial mortgages and lines of credit for working capital. When traditional financing does not work, Carnahan said they also refer people to Valley Partners and the Youngstown Business Incubator, which may be able to work with them.
“The goal is to get the business owners what they need,” Carnahan says. “It’s great when we can do it, but if we can’t, if it just won’t work for some reason, then it’s great when they can get their needs met through one of those two institutions as well.”
All three lenders indicate they recommend other resources like Valley Partners when their bank or credit union cannot make the numbers work.
Toot says working with Valley Partners can help the business owner with their projections and business plans and then the team at WesBanco can help structure the loan to their needs, whether it is a startup or an acquisition. Toot says Valley Partners helps a lot more startups than any bank.
“Everybody thinks that Valley Partners takes the deals that the banks can’t do,” Toot says, adding there is more to it than that. “They also partner with banks in maybe making it easier for a client to acquire a piece of property or machinery or a company, whether that’s less of a down payment, mitigating the risk for the bank only taking a portion opposed to the whole thing.”
Additionally, Valley Partners usually can offer lower rates than the bank funding, making it a good option for blended funding.
“A lot of times with the startups, they don’t necessarily go in with proper capital levels,” Ensley said, adding help from Valley Partners lets them overcome that.
Ensley also touts the Lunch and Learn programs through Valley Partners as an educational tool. Farmers Bank recently was named Lender of the Year with Valley Partners, a testament to how the two entities work together.
OTHER PARTNERS
In addition to Valley Partners, Carnahan says they send some businesses to the Youngstown Business Incubator to get resources, like help with honing a business idea into a plan.
One of the biggest partners all three of the lenders recommended is a good accountant.
“CPAs are your best friends when you’re in business,” Toot says, adding other resources include “a very good attorney and then a banker you can trust and that isn’t afraid to tell you ‘No.’”
With interest rates a bit higher, Ensley says business owners have to compensate. Additionally, cash flow management and creating a revenue stream can be more costly. Startups need to realize they may not break even for some time. Ensley also points out the importance of a good accountant to help business owners navigate balance sheets, purchasing and leasing benefits, depreciation, regulations and taxes.
“Business owners, they want to go out there and they’re good at what they do,” Ensley says. “They want to go sell their product. Maybe they need some help on the back end.”
Having resources on board like an accountant can help give a proposal weight and merit. An accountant’s projections can help the business owner realize they may have a cash flow hurdle to overcome, especially if their business is seasonal, Ensley says.
Another resource Ensley suggests is the Small Business Development Center at Youngstown State University. The SBDC provides free counseling and strategic planning.
Further resources he says include Score, a small business mentoring service that connects new businesses to local mentors, which can help them navigate the process and polish their pitches before going to the banks for funding.
The Small Business Administration also has information on its website, Ensley says, and programs that can help small businesses get a reduction in interest rates if they are creating or retaining jobs.
“There’s a variety of really free resources that they can utilize, that can help in trying to put those packages together and being prepared for when they come to banks for their lending opportunities,” Ensley says.
Pictured at top: Josh Toot is the executive vice president and Mahoning Valley market president of Premier/WesBanco Bank.