Newspaper Page Text
Disadvantaged business enterprises
‘having financing alternatives
By Edward Meyers
Regional Business Development
Officer, Princeton Capital Finance Co.
Disadvantaged Business En
terprises (DBEs), as the name
implies, have abigdisadvantage.
Their disadvantage lies not in
their expertise. Nordoesitliein
their ability to service their cli
ents. In fact, recent data sug
. gests that most DBEs are more
responsive and can meet the
. needs of their clients a lot quick
erthanlarge corporations. What,
then, is this big disadvantage?
~ According to the National Mi
nority Supplier Development
Council, the biggest problem
identified by minority business
owners is lack of access to work
‘i.ing capital. It’s tough to obtain.
And not securing it can hurt a
% DBE’s ability to buy equipment
~and hire employees —the ingre
dients that fuel its growth. Sim
ply put, access to capital is the
“D” in DBE.
Thisdifficulty in financing lies
primarily on the inability and
unwillingness of the average
_bank to take the risk associated
with growing businesses. When
making loan decisions, some
* lending institutions tend to look
#7 at traditional financial ratios to
#which many small businesses
. simply can’t measure up. To
~ these banks, the track record of
~ an emerging company, which
~many DBE’s are, is a blank sheet
of paper.
When faced with financial
dead-ends caused by this ap
proach, DBEs do have other al
ternatives. Those alternatives
an be found through financing
programs offered by some com
‘mercial finance companies.
One option, which many small
businesses are unaware of, is that
‘they can use their municipal,
“state, federal and commercial
..contract receivables as collater
gal to borrow much-needed work
«ing capital. Through specialized
* programs developed and main
*
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According to the National Minority Supplier
Development Council, the biggest problem
identified by minority business owners is lack
of access to working capital. It's sough to
obtain. And not securing it can hurt a DBE's
ability to buy equipment and hire employ
ees —the ingredients that fuel its growth.
tained by some commercial fi
nance companies, qualifying
commercial and government con
tractors can gain access to the
capital they need to perform their
contracts and grow their busi
ness.
Another viable option is for
DBE’s to look totheir municipal
ity forspecial financing programs
developed in conjunction with
commercial lending firms. Mu
nicipal governments are often
very anxious to implement a
strong DBE financing program,
as they can be a real economic
asset by attracting and support
ing new business and helping
DBEs take on larger prime con
tracts.
Some of the benefits a munici
pality can expect from imple
menting a DBE financing pro
gram include the following:
B DBE’s domiciled in the mu
nicipality can become more fis
cally viable thus enhance their
performance on municipal con
tracts;
M more disadvantaged busi
nesses will be attracted to con
duct business with the munici
pality as well as accelerate their
own growth;
M the municipality will be rec
ognized as having a complete
small business financing pro
gram, one that’s designed for
DBE business growth; and
B the municipality will have
access to other top performing
contractors, typically a part of a
national provider’s program.
One such program was debut
ed at the 1995 National Confer
ence of Black Mayors in Mem
phis, Tenn. by Princeton Capital
Finance Company. The
Princeton Capital Municipal
DBE program makes it easier for
small and mid-sized minority
owned businesses to get much
needed working capital, thus
benefiting both the DBE and the
municipality through which the
growing business gains access to
money.
Pamela Piper, president and
founder of Modern Technology
Systems, Inc. (MTS), can attest
to the benefits of this type of
program. In January of 1994,
MTS, an 8(a) Federal Certified
Business, was a small computer
information systems support
company with a mere five em
ployees.
“At the time, banks wouldn’t
take us seriously,” Piper said.
“We were considered too risky,
because we had no ‘bankable’
collateral. But we did have a
contract with the National Aero
nautics and Space Administra
tion (NASA).”
With the help of a working
capital loan from Princeton Cap
ital’s contract receivables pro
gram, the firm is among the fast
est growing African-American
woman-owned businesses in the
country, employing more than
170 people today, and estimates
a 30 percent increase within the
next six months!
“Business owners in my posi
tion should be aware of the fi
nancing alternatives available to
them through asset-based lend
ers,” Piper explained. “Without
these viable options for access to
capital, we could not have expe
rienced the growth we did in the
short time in which we did it.”
Princeton Capital is a S4OO
milliéon national financial insti
tution providing asset-based
loans nationally to small and
growing businesses. With offic
es in Atlanta, the company de
velops special financing pro
grams that support small busi
ness, including minority- and
women-owned businesses.
To successfully obtain the nec
essary working capital through
these special commercial finance
company programs, it’s impor
tant that every DBE has a firm
grasp on the following:
@ What are the company’s ac
tual financing needs?
B What are the company’s re
alistic financing alternatives?
B What is the business outlook
for the company?
Once these questions can be
answered and communicated
through a sound business plan,
the working capital needed to
grow most DBEs can be obtained
through a specialized commer
cial finance firm or a municipal
DBE commercial financing pro
gram.
Edward Meyers, a former
banker, is a regional business
development officer with
Princeton Capital Finance Com
pany and a leader of the compa
ny’s expansion in the Southeast
ern market. As a graduate of the
U.S.Naval Academy, Meyers was
a Captain in the U.S. Marine
Corps and a running back for the
Atlanta Falcons. Financial in
formation on asset-based loans
is available for small businesses
performing on government or
commercial contracts by writing:
Princeton Capital Finance Co.,
1100 Circle 75 Parkway, Suite
800, Atlanta, GA 30339, or call
ing(4o4)9sl-4821; fax (404)951-
4822.
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