It might take time to find a banker who believes in your company, but once you do, great things are possible.
The Lenexa-based company is a thriving distributor of commercial and industrial insulation. The company has been able to grow because Barron helped it put together the necessary financing at the right time.
Thompson and his team could then invest in critical upgrades, which helped 4-State capitalize on improving business conditions in 2012, 2013 and 2014.
None of that would have been possible if Barron hadn’t taken the time to study 4-State’s situation and realize that, even though the company had gone through a few tough years, it had a great deal of work in the pipeline and was positioned for strong growth.
Barron also recognized the experience that Thompson and his team had.
“They were able to look at my background and the background of my equity investors and see that even though we didn’t have a lot of specific industry experience, I had a lot of experiencing managing and underwriting industry,” Thompson said.
Thompson and his partners acquired 4-State in 2010. They found financing through another bank to make the initial purchase, but on less-than-stellar terms.
Thompson likes working with Barron so much that when Barron went to work for CrossFirst, all of 4-State’s accounts moved with him.
How can you find a lender that’s right for your small business? Be organized, and be proactive, Thompson said.
Being organized, for example, means that you have historical financial records for the business itself and personal income statements—whatever documentation that lenders want to see before approving your request for financing. “You’re really marketing yourself to banks,” he said.
And make sure that you talk to as many lenders as possible. Like 4-State, you might need to approach 15 to 20 institutions before you meet the right one.
“You want to really get out there in pitching your company to local lenders,” Thompson said.
7(a)’s Big Year
Demand was particularly strong this past year for the SBA’s 7(a) loans, the agency’s most popular lending product.
There was so much interest, in fact, that SBA hit its official $18.75 billion lending limit for 7(a) back in July, with about two months left in the fiscal year, and had to temporarily suspend approvals of new loans.
Congress has since increased the annual limit to $23.5 billion. And the SBA must now make quarterly reports to Congress on lending activity, which should give
Congress more warning if the cap needs to be raised again.