Fidelity Bank helps Business Navigate Capital Waters[By Lyle Smith]
Whether you’re starting a brand new business, growing the business you own or navigating the complexities of buying an existing business, the lot of an entrepreneur can be a challenging one. There’s no shortage of advice from business and entrepreneurial resources, networking groups, or friends who may or may not have experience of value, but where are the most trustworthy resources to help you start plotting your own roadmap to success?
The U.S. Small Business Administration (SBA) offers some of the most comprehensive advice, resources, guidance, and perhaps more importantly, access to capital of any organization in the nation. But as with most government agencies, successfully navigating the ins and outs of capitalizing the needs of a small business through the SBA really requires an expert. That’s where Robert Good and Fidelity Bank of Florida come in.
The calm, thoughtful voice behind the SBA team at Fidelity Bank of Florida explains the differences between conventional lending and small business lending with clarity and an understanding that only comes from experience.
Conventional Loan Alternative
“Conventional loans are built on a 20-25 percent down payment and the idea of collateral, usually real estate holdings, ensuring the loan amount,” Good says. “But small business owners are not always in a position to use those resources.”
That’s where the SBA comes in. Instead of 20-25 percent, a typical SBA 7A loan only requires 10 percent down and the government—in an effort to support the growth of American businesses—provides a 75 percent guarantee. A bank using a conventional approach would never be attracted to a loan with just 10 percent down, but the SBA alternative makes it much more attractive to institutions like Fidelity whose mission in part is to support community banking and businesses in its community.
“Community is something we place a priority on here,” Good says. “Helping to build these businesses is not just good business for us, but it’s good for our community.” Of specific interest in Brevard County, which has a large veteran population, is the SBA Veterans Advantage Program that waives most fees related to loans.
Borrowing for What?
The financial needs of these small businesses vary from purchasing or leasing property to acquiring specialized equipment that may have little to no value for a bank.
Good points to a recent Orlando client that started a recreational exercise business. The exercise equipment has a cost and a value to the business, but from the bank’s perspective, it’s not the kind of asset that has much value. With an SBA guaranteed loan and the guidance of Fidelity Bank, however, the business was able to get the equipment it needed, amortized over a longer period than conventional lending, and gave them the time and breathing space they needed to succeed. “This specialized equipment situation is where the SBA truly shines,” Good said.
That said, Good points out that most SBA loans his team handles are used to help purchase or turn around an existing business. These owners and entrepreneurs come in, he says, and while they may not have the resources, they have highly specialized experience.
One recent success story for Good’s team is the reinvigorated surf shop Island Surf & Skate in the Merritt Square Mall on Merritt Island. New owners Jesse Hunter and Cheyne Dean set out to reimagine the longstanding business using their own intuition and imaginations.
“I’d known Randy Strisko for years,” Hunter said. “And he was looking to sell the business. Cheyne and I had been interested in the idea of starting a business together for 10 years.”
The pair sat down to work on a business plan and get their numbers together, then set out to meet with some of the mainstream big banks in the area. Hunter has a longstanding retail background and Dean got his start as a marketing director for a manufacturing firm.
“We always knew we’d need a business loan to make it work,” he said. While the big banks were impressed with the pair’s business plan, in the end, their loan application was rejected because of the volatility of the retail business.
Then, they approached Fidelity Bank of Florida where they were directed toward the SBA program. Fidelity’s SBA team felt pretty good about what the pair had going on, Hunter says.
“They believed in what our vision was for the store.”
It took a couple of months to get approved, but the result was a great opportunity for a pair of entrepreneurs who might not have gotten it another way.
The SBA offers another type of loan to some qualified businesses. The 504 loan is designed for businesses in need of acquiring real estate, specifically, and creates a way of managing bank risk for loans up to $5 million.
While the 504 loan is not guaranteed the same way the 7A loan is, the agency floats bonds to manage the risk of these loans and finances at a fixed rate for up to 25 years.
The Personal Experience
Hunter explains the difference in terms of customer service.
“We’re all on a first name basis. It’s not just someone you bank with money, it’s more of a personal connection and you feel comfortable doing business with someone,” he says. “And they still stop in from time to time to see how things are going.”
Since the shop reopened in November, they’ve seen an almost 80 percent revenue boost year over year. “It’s a complete 180 from the previous business,” Hunter says, smiling. “We’re looking at expanding our footprint in the mall. We want to be one of those destination stores people come to the mall for.”
Ready access to capital is regularly identified as one of the primary challenges to a small to mid-sized business succeeding and while the possibilities for accessing capital are many and varied, the SBA provides attractive opportunities to help those entrepreneurs achieve their goals. What they need more than anything, however, is a guide to navigating those waters. The SBA team at Fidelity Bank of Florida is expert in that guidance.
“Most banks who do SBA loans will have one person assigned to a whole county or region,” Good explains, betraying an excited confidence in his team. “We have a group of five of us, all with extensive experience in SBA to help owners navigate the process.” ◆