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Topics include knowing your bank, SBA options, private finance, preparation

NORTH BAY – "Don’t let turbulent times stop you: Financing your business in a challenging environment" was the title of and the message given to small business owners during a panel discussion with four North Bay financial industry veterans in cooperation with the Business Journal.

Each panelist came with a specific area of expertise to the conference, sponsored by Circle Bank, Ghirardo CPA and Warren Capital Corp. A summary of each of their presentations follows.

Pat Kilkenny

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Mr. Kilkenny is the owner of Kilkenny Advisors, a business finance consulting firm. He has 40 years of financing experience and is currently the president of the Sonoma County Alliance. Mr. Kilkenny addressed the issue of today's financial institution environment and how banks differ in the current economic time.

“The composition of the loan portfolio is the major difference in the health of financial institutions,” he said.

Keeping in mind that the bank or lender has stress points in their balance sheets that make everything different is important, he said.

What can you as a business do, he asked. Prepare.

When looking for credit, know who you are talking to, know your risk profile and understand your lender's stress factors.

He recommended checking out the bank's financials and that seeking multiple lenders will increase ability for financing.

Clay Stephens

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Founder and chief executive officer of the North Bay’s leading specialty finance company, Warren Capital Corp., Mr. Stephens spoke on the topic of non-bank lending.

Warren Capital has been around for 25 years and has completed more than 3,000 transactions for a total transaction value in excess of $1.5 billion, $400 million in the North Bay.

He discussed the shift in lending in the last 30 years. In 1978, he said, non-bank lenders had only 29 percent of the loan market while commercial banks had 71 percent.

In 2008, however, the commercial bank share had dropped to 35 percent and non-bank lenders were up to 65 percent.

He said that the non-bank lenders have always been competitive in rates and the knowledge of specialty markets adds value.

Non-bank lenders offer equipment finance and vendor sales financing, and they work with traditional bank lenders and offer corporate finance. However, they do not offer unsecured lines of credit, construction loans or consumer loans.

He recommended being proactive—whether you are looking into commercial bank financing or non-bank financing—and knowing what options are out there.

Michael Rice

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Senior vice president and business lending manager with Circle Bank, Mr. Rice has more than 25 years of experience in commercial lending and equipment leasing. He talked about financing solutions for small business through enhanced SBA programs, which he said are beginning to see more activity.

He discussed the enhancements to the SBA 7a and 504 loans through the recovery act this year and how the new standard operating procedures could impact small businesses looking for financing.

He said SBA 7a and 504 loans create more jobs than any other economic development program.

According to Mr. Rice, one job is created or retained for every $50,000 of SBA financing.

Small businesses employ more than half of all private-sector employees and have generated more than 64 percent of net new jobs in the past 15 years.

He mentioned scenarios in today’s environment that are common for use of SBA loans including to term out existing debt, acquisition financing and debt consolidation.

Paul Breimayer

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The director of business consulting for Ghirardo CPA, Mr. Breimayer gave a list of 10 things to get prepared for when applying for financing.

He has 10 years experience as a CPA with a Big Four accounting firm and five years as a managing director of a division of General Motors Acceptance Corp.

He began with addressing the issue of time and the importance of having enough of it as well as projecting out into the future and assessing what needs will be.

Having a specific plan of how much money is needed, how long and for what will show the lender that care and time has been taken.

Knowing the state of your business, the cash flow and how you stand up against the competition is key.

In showing financial statements and tax returns, make sure they are timely. It is important to take care that there are not large or unusual adjustments, and remember that tax returns show no net income.

Selling the strength of the business and discussing how the business will leverage customer relationships, what kind of reputation the business has and showing the prospective lender core business strategies will help them get a better sense of what your business does.

Lastly, Mr. Breimayer discussed the importance of getting help with putting together a financing package.