"The biggest asset that we can provide a small business is, and has always been, the same: enabling the small business to obtain attractive, long-term financing and preserve needed working capital for expansion."
Henry Price was named a business-development officer for SEED Corp. in May. He has more than 30 years of experience in the origination of Small Business Administration loan programs, as well as in conventional lending.
Price was previously a senior vice president with Business Lenders in Hartford, Conn., a national nonbank SBA lender. He has also worked as an oversight manager and account officer for the Federal Deposit Insurance Corp. in East Hartford, Conn.
He has participated in the National Association of Development Companies, a trade association which provides support for the SBA 504 program.
Price has a bachelor’s degree in accounting and MBA in finance from Babson College.
PBN: With more than 30 years of experience working with SBA loan programs and conventional lending, as well as in commercial real estate, what do you see as your biggest asset in assisting small businesses in these difficult economic times?
PRICE: The biggest asset that we can provide a small business is, and has always been, the same: enabling the small business to obtain attractive, long-term financing and preserve needed working capital for expansion. While it is very important that a company be able to obtain financing, whether it is to purchase real estate or major equipment, obtaining financing is not the business owners’ area of expertise and can be very frustrating and overwhelming. We are able to not only allow the business owners to continue focusing on their business during this critical time, but are able to guide them through the entire process, making it as seamless as possible.
PBN: From your perspective gained from wide experience in the financial world, do you think it has become easier or more difficult for entrepreneurs to launch or maintain a business?
PRICE: While it has always been very difficult to start a new business, as well as to maintain a business, I often see that businesses now struggle more to receive needed capital due to past lending practices, which have resulted in non-performing portfolios. Despite this, due to current historically low interest rates, small business owners with strong business plans and sound management are able to take advantage of attractive financing and better service their debt obligations.
PBN: What is the biggest challenge facing small business in the current economic environment?
PRICE: In addition to being able to access attractive financing for the acquisition of long-term fixed assets, the biggest challenge facing small businesses is having adequate working capital to finance long-term growth. SEED, with its 31 years of service to small business, offers a number of important advantages to small businesses with regard to preserving and replenishing working capital, both through the SBA 504 Program, and SEED’s loan programs. The SBA 504 Program provides loans up to $5.5 million in second position to a participating bank for fixed asset projects up to $13.75 million or more. A participating bank selected by the small business usually provides 50 percent of the total project and takes a first position on collateral. The SBA 504 loan usually represents 40 percent of the project, is in second position to the participating bank, and enables a small business to do several things: to obtain low, fixed-interest-rate financing, currently 4.1 percent for real estate and 3.2 percent for machinery and equipment with a life of 10 years; limit the down payment, usually 10 percent; and include soft project costs. To enable small businesses to keep more of their cash for working capital, SEED also offers long-term fixed rate loans up to $200,000, currently at 5 percent fixed, which can replenish part of the needed equity injection requirement of 10-to-20 percent into the SBA 504 project. To limit project costs, SEED also pays half of the bank fee, which is normally paid by the small business, up to $17,187 on a $13.75 million project. As an SBA 504 accredited lender, SEED maintains one of the highest turnaround approval times in the nation.
PBN: SEED is based in Taunton and serves southeastern Massachusetts and Rhode Island. Do you think one of the states is more attractive for small business owners now?
PRICE: Most small businesses start up and grow in the markets their owners are familiar with. Knowing your clients and their needs is more important to a small business than other concerns, such as the regulatory environment and taxes. Those of us who lend to small businesses don’t get involved in the economic development game of attracting big businesses from another state. After all, small businesses create most of the new jobs. Our focus is to assist viable businesses in our backyard to start-up, grow and create new jobs, thereby improving the economy of our region. The economies of southeastern Massachusetts and Rhode Island are very similar. Our office in Taunton is half-an-hour from Providence and SEED maintains a staff presence in Rhode Island working with the Small Business Development Center and the district office of the US Small Business Administration.
PBN: What is your outlook on the environment for small business in Rhode Island and southeastern Massachusetts for the next year? Five years? Ten years?
PRICE: With the economy slowly improving, we expect that the environment for small businesses in Rhode Island and southeastern Massachusetts will continue to improve. As small business owners feel more secure that economic improvement is in the horizon, they will start more businesses, undertake more projects to grow their businesses and hire more people. The current low interest rate climate, along with lower real estate prices, is conducive to undertaking fixed-asset projects. It is just a matter of time before small businesses feel secure enough to jump in all the way. We believe that the next year will show significant improvement, and that the next five years will bring substantial small business growth. Unfortunately, our crystal ball is a little hazy as we look at 10 years hence.
Business-development officer for SEED Corp. talks about the organizations role in small-business lending.