Executives urge small and startup businesses to build close banking relationships
By James Dowd
Memphis Commercial Appeal
Posted August 6, 2011 at midnight
Photo by Brandon Dill // Buy this photo
Panelist Joy Bowen talks with Roby Williams before the start of Friday's Minority Business Enterprise Power Breakfast. Likening it to a medical checkup, Bowen urged new business owners to meet regularly with their bankers to head off problems.
While accessing capital is a challenge for many small-business owners, securing adequate financing can prove even more difficult for minority and female entrepreneurs who lack established contacts within financial networks.
That's why developing close relationships with local lenders should be a top priority for entrepreneurs, a panel of financial industry leaders advised during "The Million Dollar Question" forum held at the University Club on Friday.
Sponsored by Universal Commercial real estate company, the event featured panelists Joy Bowen, vice president of diversity banking at First Tennessee Bank; Dorothy Cleaves, vice president of private banking at Paragon National Bank;
Joshua Shipley, vice president of commercial banking at Independent Bank; and Shawn Thomas, vice president of lending at Tri-State Bank of Memphis.
"The first thing I tell anyone thinking of starting a business is to develop a relationship right away with a lender and not wait until a crisis occurs to ask for an extended credit line," Cleaves said. "Open an account, get to know your lender personally and be completely transparent about your finances. In this economy, you've got to be proactive if you want to survive."
Bowen agreed, comparing regular visits to bankers to routine trips to see dentists or doctors.
"You go for a physical or a dental checkup to make sure there aren't any problems or to detect them early on and take care of them," Bowen said. "Use that same mentality with your lender and schedule regular meetings to go over your business operations. You'll be in a much better position to apply for extra capital if you're engaged in the process from the front end."
A midyear report released by the National Small Business Association indicated that more than one-third of small-business owners are facing difficulty obtaining adequate financing for their companies. The issue is exacerbated because many small-business owners don't have adequate assets to apply for traditional loans.
Recognizing that some entrepreneurs may not qualify for institutional financing, Thomas said that alternate sources of lending should also be explored.
"You may want to consider using your personal savings or taking on investors or even working with venture capitalists if you're willing to give up some level of control," Thomas said. "The bottom line is, if your business idea is important enough to pursue, then you need to be diligent about maintaining the finances to keep it going."
Recent economic conditions have led many small-business owners to resist taking on added debt, Shipley said, due to fears of paying loans back. However, he stressed that banks are committed to helping small companies through a variety of avenues.
"We've got credit counseling services and resources available to help small-business owners grow their operations," Shipley said. "We want them to succeed, because that helps us from a business perspective and it benefits the community by creating jobs and wealth."
And that's imperative for the future of the city, said Tomeka Hart, president and CEO of the Memphis Urban League and a commissioner on the Memphis City Schools board.
"There's a disparity of wealth in our community, but supporting minority and female-owned small businesses can create a lasting positive impact in Memphis," Hart said. "It's a huge economic issue, but when one succeeds, we all succeed because our community prospers."
-- James Dowd: (901) 529-2737
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