November 16, 2011
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Affordably Build Your Brand
FedEx Global Brand Management Director Monica Skipper shares a cost-effective way to build a bigger brand for your small business.
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Trent Dalrymple
Wow, Bank of America sure did ‘step in it’ (to borrow from Rick Perry) last month when introducing a $5 monthly charge for debit card users. Customers protested by participating in Nov. 5’s national "Bank Transfer Day" (credit unions added tens of thousands of new customers in a 24-hour period)—prompting BofA to sheepishly retract its decision to charge fees.
How are big banks affecting small businesses? It depends on whom you ask.
The Huffington Post recently reported that small businesses are pulling out of big banks, citing a lack of available loans and anger over fees. But the following day, the Financial Services Roundtable, a group of the 100 biggest banks, released a report in The Washington Post saying big banks are supporting small businesses.
So how do small business owners feel about big banks?
As founder of DualEagle.com and TeamLauncher.com, a marketing agency and an outsourcing firm (respectively), Tadd Rosenfeld is conflicted about big banks. On one the hand, he thinks it's “criminal what happened—the government poured money into banks and it wasn’t lent out” and hates banking fees (“it’s highway robbery; I couldn’t feel more negatively about it”). But on the other hand, he says he doesn’t have a choice—he has to stay with the big guys.
“Big banks provide such a convenience; I do business internationally and if I need to send a wire transfer to Asia at 4:59 p.m., I can just press a button and know it will go through—at a small bank, it won’t happen as effectively,” he says.
Big banks also offer security and robust online banking capabilities, he adds. Rosenfeld doesn’t worry that Bank of America will get hacked, but is concerned about possible security breaches at smaller banks.
What about small business loans?
Here, Rosenfeld is in a good spot; both of his New York-based businesses are cash-positive, and he hasn’t applied for a loan in years. If the need did arise, though, his strategy is set.
He says, “There are thousands of banks around the country, so if I needed a loan, I would contact a lot of banks until I found one that said yes.”
Ron Nawrocki is in a vastly different position. He needs money, but the banks aren’t budging.
About four years ago, Nawrocki began asking big banks for small business loans for his company, B.I. Solutions, a Buckeye, Ariz.-based real estate investment firm. His company was doing well, but since it was involved in the real estate market, banks wanted nothing to do with it.
From there, he went to the Small Business Administration.
“They are great, but have two restrictions for loans: you can’t be using money for real estate and you can’t use it to lend to others. That is exactly what we do,” he says.
Discouraged, Nawrocki approached a regional bank in his home state. Interested in his business, the bank went through a six-month vetting process. Just two months ago, Nawrocki was denied. “It’s just been a real nonstarter with banks,” he says.
Instead of sulking, Nawrocki saw an opportunity. He now has a completely different funding model.
“About 95 percent of our money is coming from private investors now,” he says.
Today, Nawrocki holds seminars about the benefits of investing in real estate—and investors are flocking.
He says, “Their investments are secured within properties; it is working really well—we are set to raise about $600,000 in private investments this quarter alone.”
What to you think of big banks? Are you able to secure small business loans?
Check your balance, review recent transactions and pay your bill on the go.
Trent Dalrymple 6 months ago
Our company was in the same position as the real estate investment firm but also found the banks unwilling to talk about loans when it comes to real estate so we are the lender (private but licensed). We've been able to fill the gap, lending on distressed real estate that the banks need off their books and the investors and home buyers want to buy. Probably because we're not too big and stay within our own localized area it works well for us, we understand our market and can help our borrowers with their project and home purchase. It really is a win-win here in the Detroit area.Trent DalrympleDirector of Investor RelationsMetro Mortgage InvestmentsHuntington Woods, MI