A good banking relationship can aid when it's time for expansion

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					                                                                                   Finance
Climbing the ladder
                                                                                                                                                             Financing a business presents different challenges for
                                                                                                                                                             a startup, a growth company or an industry veteran.
                                                                                                                                                             NJBIZ reporter Martin C. Daks talked to company
                                                                                                                                                             leaders and their lenders to find out how financing
                                                                                                                                                             strategies evolve each step along the way.
To receive financing, startup companies must prove themselves early




                                                                                                         Christina Mazza
             By Martin C. Daks                                       ness,” according to SBa’s Web
Startup companieS may be vital to the                                site. “this ensures that, when
nation’s economy, but to a banker, they also                         combined with borrowed funds,
represent a big risk.                                               the business can operate on a
      “most of the startups we finance come                         sound basis.”
through a program with an SBa guarantee, since                           edgar and his partners also
a startup has no track record,” said Tom Harrity,                  had to personally guarantee
chief lending officer of Hackettstown-based Sky-                   they’d repay the loans, and had to
lands Community Bank. “We ask for personal                        furnish personal tax returns and
loan guarantees, and it helps if there’s some kind                financial statements, a business
of cushion, like a partner who works at a different              plan, and other documents. in
job to bring in cash while the startup takes off.”               addition to huddling with a banker
      that’s the approach Brian Edgar took                       and an SBa representative, they
when he and two co-owners applied for a Small                   also enlisted the aid of a lawyer and
Business administration loan for an Elevation                   an accountant.
Burger franchise in montclair.                                         Bankers say they prefer startup
      an SBa loan will finance a portion of the                chief executives to have some experi-
store, and “the balance will be funded with                    ence in their field, but edgar says the                     When Brian Edgar, right, applied for an SBA-backed loan to help jump start the Elevation Burger franchise in
our own cash,” said edgar, a former Bank of                   fact that he and his partners all had                        Montclair, he said he had to show previous financial experience, statements and tax returns to the Small Business
America stock trader.                                         finance backgrounds helped.                                  Administration. Edgar stands alongside Elevation Burger shift supervisor Megan Lightner in the restaurant.
      owner’s equity, commonly known as                              “even though we didn’t have
“skin in the game,” is a critical part of getting            experience in the quick-service res-                          on our own, the bank would probably be more                great idea, but they don’t do the proper research,”
SBa to guarantee a portion of a business                     taurant segment, we each have a busi-                         hesitant about making a loan.”                             he said. “often, they’re overly optimistic. We ask
loan, which can make a bank more comfort-                    ness and finance background,” he said.                              plenty of startups suffer from poor plan-            them to scale down their assumptions, and then
able about issuing the financing.                           “also, the elevation Burger franchise                          ning, said David S. Yanagisawa, chief lending              ask what will happen in a worst-case scenario. if
      “Business loan applicants must have                   has a good national track record and                           officer at Lakeland Bank, based in the oak                 they don’t have a good answer, then they’re not
                  a reasonable amount                       provides a lot of business support. that                       ridge section of Jefferson.                                likely to be a good credit risk.” u
                      invested in their busi-               makes a difference. if we tried to do this                           “Some entrepreneurs think they’ve got a                                      E-mail to mdaks@njbiz.com



                                                           A good banking relationship can aid when it’s time for expansion
                                                                                                                                                                                           Keeping a banker happy
                                                                       By Martin C. Daks                                      owner and a bank helps a lot, especially when a
                                                                                                                                                                                           Bankers hate surprises, so an
                                                           GAiL VAnCE CiViLLE likes to stay close                             company seeks expansion financing, said Mor-
                                                                                                                                                                                           entrepreneur that keeps a lender in
                                                           to her banker. it’s a philosophy that seems                        timer J. O’Shea, Hilltop chief executive.
                                                                                                                                                                                           the loop improves his or her shot
                                                          to work, since her product testing company                                “We want to understand their business
                                                                                                                                                                                           at getting financing. here are some
                                                          has picked up financing for two significant                         and their expansion plans,” he said. “are they
                                                                                                                                                                                           things that make bankers happy:
                                                         expansions in the last six years, both times                         going into a new product line, or a new geo-
                                                                                                                                                                                           n Continuing, open conversations
                                                         with the same 
				
DOCUMENT INFO
Description: In both cases, [Summit- based] Hilltop Community Bank provided financing for build out and other activities. Because her company has operated since 1986 and has a track record, Civille was able to provide prior-year financial statements that bolstered her loan request.
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