Banking New England March/April 2013

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long as your small, local bank is progressive enough to offer products and services that can help you maintain a competitive advantage,” he advises. Houlne recommends that home-based businesses choose between an asset-based lender or a cash-flow lender. Asset-based lenders require collateral in tangible equipment. Cash-flow lenders lend money based on cash received.

Collaboration makes it work

During his 40-plus years as a commercial lender, Louis H. Guevin Jr., executive vice president of commercial services at Bank of New Hampshire in Laconia, has helped dozens of home-based companies from jam-making operations and mail order businesses to woodworkers and interior decorators. In the 1970s, he assisted an individual who launched a pet rock company. Regardless of industry, all these businesses benefited from the team of experts that collaborate with the commercial lending professionals. Partnerships with attorneys, accountants, insurance experts and an experienced banker can help the home-based company access all the necessary tools and industry knowledge it needs to thrive. “We work closely with the SBA and SCORE to offer workshops and seminars,” Guevin says. Some of those events have addressed financing a business, using online banking and appropriate insurance coverage for a business. Dealing with a small, local financial institution carries other advantages. At startup some home-based businesses may hesitate to apply for a loan, thinking that a small customer base, inventory and investment in the company will lead to rejection. Guevin reassures these business owners. “Primarily we look at cash flow, not collateral. Cash pays the loan, not collateral,” he says. “We work with economic development agencies and do unsecured and secured lending. If you walk into a bank with a great idea, we’ll figure

According to the 2007 Census: 52% of respondents were home-based businesses 57% made less than $25,000 7% made $250,000 or more 30% launched with less than $5,000 in start-up capital 1.5% required $1 million or more

out a way to get it done.” Also, lending officers who live and work locally can provide quicker access and faster turnaround times when it comes to loan approval. The relatively small size of loans for home-based businesses enables local institutions to use their “lending authority,” says Guevin.

Technology facilitates the business connection

Without a doubt, technology has changed the way the world does business. Jordan D. Hoy, vice president of business banking at Savers Bank in Southbridge, Mass., cites the important role technology plays for businesses based out of a home, which are typically “sales-serviceconsulting, expense-sensitive or lifestyle driven operations.” He says, “The web and other technologies allow these businesses to compete from home, while the tremendous advances in online and electronic banking allow them to operate more efficiently and effectively.” Savers Bank offers Business Express solutions, an online cash management platform, where businesses can deposit checks, wire funds, or make ACH payments from the home office or on the road. To help home-based companies manage the technological learning curve, Savers offers informational sessions

for both retail and business customers. “Currently, we are offering a free online three-part tutorial titled Security Awareness Training. It addresses the growth in cybercrime and important steps to protect sensitive personal and business information,” says Hoy.

Credit unions join the ranks of lenders

Credit unions entered the commercial lending market in the mid-1990s, offering similar benefits as banks to its members, including home-based businesses. Rules no longer tie membership to employment situations, thus opening eligibility to a wider customer base. “You have to live, work or worship in a particular geographic region,” says Vinod Vaidyanath, assistant vice president of business development at Mass.-based Webster First Federal Credit Union (WFFCU). With a $5 minimum deposit in a savings or checking account, home-based companies can open no-fee checking accounts and apply for loans. “SBA lending helps qualify those who don’t have the collateral they would need for a regular business loan,” says Vaidyanath. “And the SBA gives an 85 percent guarantee on loans of $150,000 or less and a 75 percent guarantee on loans of $150,000 or more.” Thomas Boland, assistant vice president Continued on page 24



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