OSB’s SBA Financing Helps Small Businesses Adjust to Market Changes

Michelle Brasseur, an OSB Community Bank Senior Commercial Lender, tells how the flexibility of  SBA loans can provide financing relief to small businesses.

“There are so many fantastic advantages for businesses who access SBA financing solutions through a local community bank. Early in my lending career SBA was the primary loan product that I worked with, but for the past 18 years I would say that SBA, and specifically SBA 7A, is one of the loan products that I would consider when structuring loans for clients.

This year I discovered an amazing servicing opportunity that was truly a lifesaver for one of our clients at OSB Community Bank. As a family owned business in an industry that has been experiencing declining sales and margins, this client was facing financial challenges. The stress of these conditions was showing on the client’s income statement and balance sheet. When our client requested additional financing, we had to explain that what they really needed to do was reduce expenses to align with the reduction in their current and projected sales. We encouraged them to work with their accountant to see what expenses they could reduce.

Soon after, the client came back to me with solutions to significantly reduce their expenses, showing their commitment to making the changes necessary for their survival. As a result, the bank felt comfortable looking at what financing options we could offer to them. After doing some research, I discovered that you can extend the maturity of any SBA loan up to 10 years. Doing this allowed us to provide payment relief to our client, whose business continues to do well today.”

Reinvesting in Our Community, One Organization at a Time

OSB’s President & CEO, Rick Northrup shares what’s at the heart of OSB’s passion for helping small businesses grow.

As a community bank, OSB understands what makes our neighborhoods, villages, and towns unique. We focus on lending to the small businesses and organizations that make us who we are.

A recent example illustrates this:

A charter school in our community was looking to grow and move into a new facility.  The school had been operating in a rental building and the administration wanted to own a building in order to control the school’s future and growth. Although the school and staff had been in operation locally for many years, the only financing available to them was from large, out-of-town financial institutions, which was expensive with very disadvantageous terms. The school could not afford this type of financing without inhibiting its growth. In fact, the school would have had serious financial struggles under the terms, placing its long-term success in jeopardy.

At OSB, we looked at the situation and found that the school’s students had very high academic results; the school’s staffing was strong and experienced; and the school also had committed parents. The building that the charter school wanted to purchase was an old elementary school, which would allow the school to double in size. At the time, the school was serving over 140 students, representing over 100 local families. The school and its plans made sense to us.

The team at OSB got to work, examining the school’s track record, business plan, staff, and education philosophy.  We also investigated the school’s collateral, learning about the potential for reestablishing a school there for the long-term, and understanding its value. When all was said and done, OSB offered a package of term loans and line of credit financing that allowed the school to meet its goals, without placing its financial future in jeopardy.

Since purchasing the building, the charter school has grown and is on track to double its size, as planned.  For the current academic year the school is serving over 200 students and 150 families. Soon the school expects to serve 300 students.

This is how OSB Community Bank reinvests in our community, making things better for all of us who share this little corner of the world—one organization at a time.

OSB’s Flexible Financing Creates Opportunity for Small Businesses

Ted Schork, Vice President, Commercial Banking at OSB shares how our community banking philosophy has helped one local business succeed.

“A key benefit of community banking for small businesses is our willingness and ability to be flexible in the financing solutions we offer. I was recently reminded of this when OSB had the opportunity to serve one of our long-term, residential mortgage clients who also operates a small, family-owned business which has been part of our community for more than twenty years.

The business is co-owned by a father and his son and daughter-in-law. It provides excavating, logging and trucking services. Earlier this year, one of the company’s main customers indicated that two of its other subcontractors would no longer be providing trucking services due to their retirement. This customer needed to find another subcontractor to take on the additional work and contracts. They offered this opportunity to our client.

To be able to capitalize on this opportunity, the client needed to purchase another semi-truck, a trailer and logging equipment for their business. They approached our commercial lending team with their financing needs and the desire to keep as much of their current cash position as possible for working capital. Typically, a loan requires using a good portion of cash as equity or a down payment. Instead, OSB worked with this client to utilize the equity in their other vehicles and equipment to structure a loan that met their needs.

Creativity and flexibility in OSB’s approach to commercial lending helped to create a “win-win” situation and the ability to honor our commitment of serving our clients for the long haul.”

SBA Loans Provide Alternative Funding Options to Fuel Local Business Growth

Matthew J. Chrome, Senior Vice President, Chief Credit Officer, at OSB shares how SBA loans can help local small businesses grow, as we recognize National Small Business Week.

Over the course of my 20-plus years in banking, I have found that when working with small businesses, it is often necessary to look beyond conventional commercial loans in order to help fund their growth. The government’s Small Business Administration loans are often an ideal option that a community bank like OSB can access for its small business customers.

I recall two particularly poignant examples of using SBA loans to fund small business clients—one at the beginning of my career and one not too long ago.

In the first example, I learned about the power of SBA loans as I worked with a more senior lender who was trying to structure a loan for a minority-owned, fledgling business to buy or build a new building for their headquarters.  The business had some warts in its financial statements, including friendly debt and stagnant lines of credit. These are things that are commonly found with small, growing businesses. By looking outside of traditional lending options, this commercial lender found opportunity in the SBA 504 program.

The bank took on 90 percent of the construction loan to build the new headquarters, and the Economic Development Corporation took on 40 percent of the end loan exposure, leaving the bank with a 50 percent advance on the end loan. This alternative funding option gave a small, cash-strapped (but growing) business the money it needed to build a new headquarters—and the company is still performing well, 21 years later.

More recently, I was able to structure a series of SBA loans to support a prominent, growing restaurant business that wanted to expand further. The business has a track record of sufficient cash flow and is a consistent supporter of the community, but it does not have the collateral needed to support a conventional commercial loan with the bank.  Their significant shortage of collateral would normally stop the commercial loan process, but the SBA 7A loan program provided a government guarantee to the bank, in case of loan default, encouraging the bank to make the loan.

For small, growing businesses, having access to capital can make all the difference when it comes to achieving the next level of success. However, many businesses may have sufficient cash flow, but not enough collateral to qualify for traditional commercial loans. Or, they may have had some debt issues or some past financial misfortune that puts a blemish on their financial records. This can leave them limited in their ability to move ahead—unless they work with a lender who can offer some non-traditional financing options, like SBA loans.

Behind Every Successful Business Loan is a Great Customer Relationship

In celebration of National Small Business Week,our commercial lending team is sharing how OSB helps local small business owners find flexible financing so they can take advantage of new growth opportunities. John Spiedel, Senior Vice President of Commercial Lending at OSB shares his thoughts below.

“While many banks focus on solely the dollars and cents of a commercial loan transaction, at OSB we look beyond the numbers to learn about the amazing people who have a real passion for building our community.

True community bankers are intensely focused on their community, but they also recognize that a community is defined by people—not just by lines on a map. A perfect example of this philosophy in action is the relationship that OSB has formed with a mid-1980’s University of Michigan alumna who lives in California and has an extremely successful consulting business there. Even though she lives far away, she has always stayed connected to her hometown, Ann Arbor, including making investments in student rental properties in the city.

Recently, this customer decided to purchase additional student rental properties in Ann Arbor, but none of the other “local” banks wanted to lend to someone living outside of Michigan. She was referred to OSB by another local business owner (who has since become our customer as well). Instead of dismissing her request on a geographic basis, we looked deeper, taking the time to learn about her goals and to understand her keen business sense and conservative, disciplined nature. We also noted that she flew in each month to visit each of her Michigan investments in person. She was hardly an absentee owner, which made her an even better potential customer.

By working to understand not only the financial situation but the person behind the numbers as well, we saw that this scenario held not only manageable risk, but a great potential customer relationship. Her investments in property renovations have been carried out by local workers using materials bought locally. This customer’s satisfaction with OSB’s small business loans and our way of doing business is evident in her willingness to recommend us to her many other Ann Arbor business contacts. This is proof that behind every successful business loan is a great customer relationship.”

Celebrate the Difference Community Banking Can Make for You

April is Community Banking Month…and in keeping with the national theme, “Grow Your Community,” OSB is committed to expanding relationships and opportunities in the local markets we serve.

At OSB, we take the difference of community banking seriously. When you do business with us, your money goes to work right here in our community to improve the economy and access to affordable funding for small business owners, families, consumers, and everyone who lives and works in our communities.

As we reflect on what community banking means to us, we want to thank you for allowing us to partner with you to help you achieve your goals. We look forward to celebrating Community Banking Month with you. Stop by one of our branches and see the difference that banking locally can make.

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Top Tips for Reducing Your Risk of Credit Card Fraud and Identity Theft

chipThe numbers don’t lie: the problem of credit card fraud and identity theft is still prevalent. In fact, the 2016 Identity Fraud Study by Javelin Strategy & Research shows that there are more victims than ever with over 13 million Americans affected last year. Overall, identity thieves have stolen $112 billion in the past six years that’s nearly $35,600 per minute, or enough to fund a four-year college degree in less than five minutes.

How can you protect yourself from credit card fraud and identity theft? Try these tips:

1. Enact a credit freeze. A credit freeze, also known as a security freeze, stops unauthorized individuals from getting access to your credit report. Creditors check your credit report before opening new financial or service accounts in your name, if you block access to it, identity thieves won’t be able to open credit cards in your name. When you are ready to apply for new credit, you can reverse the credit freeze.

2. Keep mobile devices secure. Tablets and smartphones are extremely convenient and efficient for managing your finances. However, unless you secure them properly, you can leave yourself vulnerable to credit card fraud and identity theft. Make implementing all available software updates for your devices a priority and use the security features offered by Android and iOS platforms, including biometric (fingerprint or voice recognition) passwords and data encryption. In addition, look for settings that allow you to remotely wipe clean the contents of your device if it is lost or stolen.

3. Set strong passwords. Your password is the first line of defense against credit card and identity theft. Changing your passwords on a regular basis is also an important step. If you can’t remember your passwords, try using an electronic password manager such as LastPass to keep them straight and secure.

4. Activate account alerts. Most financial institutions, credit card issuers and brokerages, offer free text message and email notifications to provide you with real-time alerts of suspicious activity. Make sure you keep tabs on these notifications and if you do receive something that indicates fraudulent activity, contact the account issuer immediately.

5. Don’t disregard data breach notifications. According to AARP (American Association of Retired Persons) research, 20 percent of data-breach victims suffered fraud in 2015, up from 1 in 7 in 2014. Retail breaches remain a major source of these breaches, but the largest increase in breaches was in government agencies and health care organizations, both potentially risk the exposure of your Social Security number and potentially financial information as well.

Even the most stringent security measures cannot provide absolute protection from credit card and identity theft. That’s why it’s so important for you to take proactive steps to safeguard your own financial accounts and stay vigilant when monitoring for any suspicious activity. If you have any questions about credit card fraud, identity theft or protecting your financial information please contact us.