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.”

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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.”

Why Community Banks are Different…in a Good Way!

All banks are the same, right? They’ve all got tellers and lenders, they cash checks and write loans, they have ATMs. They all do the same things, because they’re all the same—or are they?

It’s a fact: Community banks are different. Different…in a good way. For example, community banks do more than just cash checks:

They’re helping businesses grow.

U.S. Small Business Administration statistics show that small firms employ just over half of the private-sector workforce and created nearly two-thirds of nation’s net new jobs over the past decade and a half. Community banks are natural partners to small businesses because they understand them so well and are committed to their success. As such, the funding, expertise and opportunities small businesses receive from community banks helps them grow and keeps dollars in our community – making it an even greater place to live

They’re creating jobs.

Community banks employ more than 700,000 Americans across more than 52,000 locations nationwide, according to Independent Community Bankers of America (ICBA). In addition to their own employees, community banks help create employment locally by improving the economic infrastructure of the communities they serve and enabling businesses to get the financing they need to grow and add more employment opportunities.

They’re supporting the local economy.

ICBA statistics also show that community banks fund nearly 60% of small business loans under $1 million – reinvesting their deposit dollars back into their community. As a small business themselves, community banks are passionate about ensuring that the communities they share are thriving.

They’re helping local farmers.

Consistently the largest provider of agricultural credit, community banks provide $57 billion in agricultural loans (ICBA data). This comprises more than 70% of commercial agricultural loans in America.

They’re doing more than writing checks.

Communities banks, like OSB Community Bank (OSB) give back to the communities they serve, providing financial and in-kind support to organizations in their communities. Reinvesting back into the community is a central part of the community banking philosophy. OSB employees volunteer many hours to local community organizations – serving on boards for Hospice of Lenawee, Kiwanis, Cascades Humane Society, Jackson Enterprise and many more. Plus, our team is always ready to get involved in community events that foster stronger relationships.

They’re here for the long haul.

A community bank isn’t just another bank. Community banks are different and making a difference to the businesses, individuals and communities they serve. They strive to develop long-term relationships and are committed to supporting the local community through employment, reinvestment and volunteerism. Despite the uncertainty facing other financial institutions community banks are here for the long haul, so you can feel confident that working with (or for) a community bank is a decision you can feel good about over the long-term.

The Spirit of Community Banking

OSB
The OSB Team is proud to serve our community.

With Thanksgiving literally right around the corner, it’s the perfect opportunity to reflect on the abundance that we have in our lives and how we might make things better for those who are not as fortunate as we are.

Family, friends, having a means to make a living and being part of a caring community…these blessings are easily taken for granted in our fast-paced lives, yet for some people these things are out of reach. As a community bank, we strive to do what we can to help improve the opportunities available to those in the communities we serve during the holidays—and throughout the rest of the year.

This past year, we have proudly supported area schools and students through our back to school drive, the Dr. Fish scholarship awarded to Lenawee and Jackson County high school graduates, and additional financial support. We have also been fortunate to have many opportunities to work with a diverse group of community organizations and to participate in their fundraising efforts to make our community stronger.

Helping our local business community thrive is an integral part of OSB’s mission. Our Small Business Summits and Business After Hours events are key parts of our commitment to helping businesses succeed by providing education and networking opportunities. Our leadership team is also dedicated to making a difference in our community by lending their time and talents to local nonprofit organizations including HOPE Community Center, Hospice of Lenawee, Lenawee County Mission, and Cascades Humane Society.

OSB is thankful for the opportunity to serve the residents and businesses in our local area. We look forward to sharing the spirit of community banking during this holiday season and all year long and we encourage you to consider how you can make a difference, too.