It is not unusual for business owners to become frustrated when facing the challenges of launch, recovery, or growth. The ‘how-to-get-there-from-here’ process can be daunting. So, too, is the task of starting over when an economic downturn has caused customers and suppliers to disappear. With sales volume as well as margins diminished, traditional management methods are often inadequate. But when trapped in this manner, what is the answer? So where's our ‘friendly banker’? Once central banks changed the rules in response to the 2007-09 subprime lending crisis, former, ‘friendlier’ bank models were no longer a fit. At one time, a more or less established enterprise could count on their local branch manager for help. Finding such support today would be unlikely. Therefore, small to midsize businesses (SMEs) are often out of luck, referred to as the ‘missing middle’* meaning the enterprise is too large to qualify for a “micro-loan” (e.g., backed by a business owner’s home equity line) and too small for a conventional bank loan. The way I understand it, the Bank for International Settlements, located in Basel, Switzerland, is a financial institution that serves all member-nation central banks. This houses what is called The Basel Committee on Banking Supervision.** Due to the subprime financial fiasco, selected executives organized an ‘accord’ named Basel III. This group came up with recommendations to avoid yet another global catastrophe. As a result, bank policies were universally changed, redefining the rules applied to a local Bank’s commercial loan customers. Although some of this occurred after the previous financial downturn (1981), chances of now finding a ‘friendly banker’ are remote. Where viability-based lending was once commonplace, it no longer exists within conventional banking. Today’s bankers focus on a loan prospect’s asset coverage capabilities and their business’s historical financials. Unfortunately, providing five years of sound financial background becomes problematic when the markets that first created them have disappeared. Conversely, a new launch will not have any history with which to secure a bank loan. This brings about a shift towards equity capital. Unfortunately, be it ‘angel’ funds or venture capital, forecasted returns must be much higher than the average SME can generate. Typically, mediocre growth prospects or lack of liquidity will discourage even the most patient investor. Focused on ‘viability-driven’ growth initiatives – a strategic must when seeking private financial support – Entrepreneurialize Opportunity Corp. – creates, structures and helps execute a wide variety of generally straightforward but effective solutions. *A term accredited to Céline Kaufmann of the OECD Development Centre (The Organization for Economic Co-operation & Development), Paris. ** Source: investopedia.com
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