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Today hearings are going on in Washington to decide how to clean up the financial mess that has been building over the last decade or more. They are trying to figure out how to bail out big businesses so they don’t fail and cause more of a mess for us all. What are they really doing for us? Can they help the small business owner? Are they even considering the small business owner?
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The reality is the financial markets are in disarray because mortgages were made available to high risk borrowers using programs they couldn’t afford. Then as interest rates rose the payments got too high and the high risk borrower couldn’t afford the payments any longer.

Lenders are now looking at all lending practices. In the small business lending market, there used to be very easy to obtain loans and lines of credit for a small business owner up to $50,000 with very little documentation. Well, now that the financial crisis has hit the easy programs are falling to the waste-side.

Keep in mind when you are applying for a small business loan, more now than ever, an approval is based on the level of risk of the borrower. If you are a high risk business or business owner you aren’t going to get an approval. If you lower your risk by being in compliance with the lending markets, having a business credit profile, a solid business credit score, good trade references, revenue in the business and a good personal credit score you improve your chances of an approval.

If you don’t have all of those things to lower your risk, don’t wait. Start now to improve your standing as a low risk borrower so as the credit markets loosen, and they will in due time, you are ready to take advantage of the programs that will be made available.

So what do you do now? There are several lending options for the small business owner. The best option is one that doesn’t cost money with high interest rates, trade credit. Trade credit, also known as business or corporate credit is easier to obtain once a business is in compliance with the lending markets. It is when one business sells a product or service to another business on credit terms. Typically without interest if paid within 30,60 or 90 days.

In addition there are several other alternative financing options that will be easier to obtain once a business is in compliance and obtained several trade accounts with vendors. Those options include equipment leasing, merchant account cash advance program, equipment sale-lease back, factoring, purchase order financing, angel investors, etc., etc.

The place to start when seeking financing is to put your company in compliance with the lending markets. The first step in that process is to incorporate and then do everything you need to in order to lower the risk level of the business. Get a business license, list your phone number with directory assistance and about 2,000 other checks that a lender can do to determine your level of risk. The BCS Compliance report will do those checks for you.

In today’s financial crisis we need not sit back and wait for the government to save us. We as business owners are the ones that built this country, not the law makers. We need to start right now, doing everything we can to build revenues, add jobs and provide a quality service or product that’s needed in today’s market place. When we do that, good things will happen.

David Gass

Every week I sit down and look at what’s happening in the credit market, read questions from our readers and clients about how to run a successful business and read the latest headlines to determine what topic is relevant for my weekly blog post.

This week is a bit different. Today I will write the story of how I sold Business Credit Services.

I started Business Credit Services back in October of 2000 and brought in a partner, Dave Von Holten in January of 2001. When Dave and I first meet to discuss the business and direction we wanted to take, we asked each other a few questions about how we would work together. One of which was “What is your exit strategy?” Dave said “I would like to exit in 3-4 years.” Which is exactly what happened, he was bought out of the business in October of 2004.

Dave then asked me what my exit strategy was. I responded at the time “I’ll work here until I can let my kids take it over several years down the road.” In October of 2004, I reevaluated my exit strategy. I couldn’t see my kids, now 8 and 1 ½ taking over the business any time soon. So I thought about other exits for the business. Over the next few months I wrote down a lot of goals for the business and my personal life. One of the goals was to sell Business Credit Services to The Company Corporation before I turned 40 and for a specific price. I believe in specific goals. You never want to just say I’ll sell the company, you always want to write down to whom, for what price and by when.
The Company Corporation’s General Manager had visited Dave and I a few months earlier to look at sending leads and clients back and forth between the businesses. So I thought, why not? I’ll write that company down for now.

The Company Corporation is the largest incorporation firm in the United States. They are the small business incorporation division of CSC (Corporation Service Company) a 100 year old company whose founders actually drafted the corporate statutes of Delaware, the number one place for publicly traded companies to incorporate. They provide corporate services for law firms across the country and have acquired divisions of many familiar names such as Register.com, NameProtect, The Company Corporation, Prentice Hall, Lexis Nexis, Diligenz, Entity Services, and US Corporate Services. They have resident agent offices in all 50 states and offices in Europe as well.

This year the General Manager of The Company Corporation called to check-in and see how things were going, the same person from 4 years earlier. He called to congratulate us on being listed in the Inc 5000 Fastest Growing companies for a second straight year and to discuss the success of our two companies referring business back and forth. During the conversation, he asked if I was interested in selling. I told, “Make me an offer and we’ll see if I’m interested.” It was my nice way of saying, “If the price is right, yes.”

Within two weeks, they made me an offer and we closed the deal last Friday.

What does this mean for our clients?

Business Credit Services will have more resources available to provide an even bigger selection of products and services for the small business owner to meet their financing needs. In addition we will be able to offer a whole suite of services and products for the small business owner through the CSC family of companies. We are able to work closer with lending institutions and vendors that offer credit because of the number of clients we can bring their way. The leverage of numbers is the key when it comes to building relationships for financing small business owners.

Be on the lookout for announcements in your mailbox and email for new programs and our latest seminars. We will have our first co-sponsored seminar with The Company Corporation and CSC this November in Philadelphia. We look forward to presenting new speakers, topics and strategies for small business owners to survive in today’s market place.

Some of you may ask, What about you? What happens to David Gass in all of this? Well, if you like getting my emails every week don’t worry –I’m sticking around.

More to come in an announcement soon to your inbox.

David Gass