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.

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.”