Friday, October 23, 2009

Raising money in 2009: Strike One--Tri Counties Bank

I got a call yesterday from a rep at Tri Counties Bank. He had recently come in the week before and sat down with me regarding our needs. I sent him back with a full set of financials and an outline of our expansion plans. At the time, he seemed very positive on the outlook and indicated he would talk to his underwriting department as soon as possible.

I wasn't surprised when he called yesterday without positive news.

He said that the underwriter reviewed our information and that our expansion wasn't in line with "historical growth needs" but rather based on "accelerated needs" which the bank wasn't comfortable with. He indicated that our new opportunity for expansion was great for our business, but something that otherwise scares a lending institution because of the rapid and dramatic rise in the need for capital.

Rather than being open to $750-$850k in financing, he said the bank couldn't approach anything beyond $250k and that would have to be fully secured with collateral. He indicated even this would be a stretch for them. This was different than what he originally wrote in his email:

"We are often much more flexible than our larger counterparts. When we need outside guarantees we can turn to the SBA 504 program, or California Capital (like an SBA for the state of California)."

When I asked about these guarantees, none were volunteered or offered.

To be fair--he was very nice the entire time and I appreciated him coming to the office and sitting down with us the week prior.

I talked with an associate and she said she didn't think the story would be different with any of the other banks. "In this economy, you almost have to prove you don't need the money to actually get the money..."

We'll see...


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Linda #3 said...

Take a deep breath. Here is our truth: We have $1,550,000 in tax assessed collateral and can not get $247,000 to pay off our remaining in free and clear! I am slightly further down the funding road than you and have just advertised on Craig's List. Loan sharks have surfaced! As Skywalker would say, the banks have gone to the dark side (on taxpayer dollars). That collateral bull is incredulous. I will be watching and hoping for you.
Kind regards. Growing Business Linda

Linda#3 said...

Could you please add the bank that received the biggest government bail out? Wells Fargo Bank. Oh! If you want a real nasty old timer that used to fund my business for 25 years, try Bank of America. You might as well meet Guido in a back alley. Sorry, but best wishes