Category Archives: Business Advice

Your Small Business Fairy Godmother: Pacific Coast Regional Small Business Development Corporation

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At Grandpoint Bank, we’re proud to have many interesting people on our team, and interesting people like to get involved with interesting organizations. David Ross’ chairmanship of Pacific Coast Regional Small Business Development Center (PCR) is a great example.

David is executive vice president and chief credit officer of the Bank. In that role, he’s provided services to many Southern California businesses, which was part of the appeal for him with PCR.

“It’s important that people get the assistance they need to know how to run a business and everything that goes with it,” said David. Remarkably, the lion’s share of that assistance is available for free from PCR.

Knowing PCR’s good work was “worthy of support,” David first joined the board in 2012. During his tenure, the board and staff have reflected the same diversity of the predominantly minority business owners served by the organization, including women.

“Our board is a mixture of many backgrounds, which provides important perspectives,” said David.

Business owners, whether new to the game or serial entrepreneurs, can access training and consulting sessions focused on QuickBooks, social media, web design, business plan development, record keeping, legal matters and more.

PCR can also assist with business loans. If a business doesn’t qualify outright for a loan with its bank, that bank can obtain a government guarantee on that loan from PCR. PCR can also direct business owners to banks where they have working relationships, like Grandpoint Bank, if the owner is seeking a loan, with or without the government guaranteed loan assistance. PCR only loans directly through the Small Business Administration (SBA) loan program. More information about the loan assistance services provided by PCR can be found on its website.

Many small business assistance centers handle California guaranteed loan programs, but PCR is one of the few that has expanded its offerings to serve local business owners and aspiring entrepreneurs in the multiple ways they need support the most. For 40 years, PCR has been a tremendous resource for people throughout Southern California, and even statewide.

One remarkable business assistance program that PCR pioneered is the Business Interruption Fund. As most Los Angelenos know, LA Metro has been building an extensive light rail system. During the red line construction, many businesses were adversely impacted and lost significant revenue.

Subsequently, Metro put several million dollars into its budget to fund grants and selected PCR to manage the grant process. Small businesses demonstrating disruption impact are eligible for a grant to cover lost funds.

The Business Interruption Fund has become a model for the state and nation. The program’s manager was hosted by LA Metro at the national transportation conference in Detroit, and PCR was contacted by Israel, whose leaders are looking to start a similar program. PCR also sends people out through disruption areas to let business owners know about the fund and the educational programs offered through PCR.

We salute PCR’s and David’s work to reinvest in our communities and in people who are bringing their entrepreneurial dreams to life.

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2017 Economic Forecast from Beacon Economics

Recently, our Los Angeles and South Bay offices hosted an annual economic forecast featuring guest speaker Dr. Christopher Thornberg of Beacon Economics.  He shared his 2017 economic forecast with approximately 140 of our clients and guests, taking a look back at past trends and addressing the outlook for the global, national and California economic markets. You can view his presentation by clicking here.screen-shot-2016-09-13-at-11-07-51-am

Browsing through the presentation will reveal Beacon Economics’ assessment of the economic impacts of the presidential election, the strong points and challenges of our current economy, useful employment and housing information and much more.

Dr. Thornberg is widely considered to be one of the nation’s leading economists. An expert in economic forecasting, regional economics, labor markets, economic policy and real estate analysis, he was one of the earliest and most adamant predictors of the subprime mortgage market crash that began in 2007. Prior to launching Beacon Economics, Dr. Thornberg was a senior economist with UCLA’s Anderson Forecast.

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Refinance Your Conventional Business Loan into a SBA 504 Loan

leticia-scearce_biltmore-bankThe SBA Debt Refinance Program is back! Does your small business have a maturing or high-cost conventional loan for real estate, buildings or equipment? The long-term, fixed rate financing available through the SBA Debt Refinance Program can help small businesses that face significant balloon payments, require financial flexibility or want to take cash out from appreciating assets for expansion.

Under the new program, small businesses that refinance into a SBA 504 loan can take advantage of lower rates, fixed for 20 years, to lighten their monthly debt payments, improve cash flow and stabilize operations.

These parameters can help determine whether this program might be a good fit for your business:

  • The debt to be refinanced must be at least two years old.
  • The debt to be refinanced must be current during the last 12 months.
  • Eligible small businesses can obtain up to 90 percent financing for secured debt and qualified business debt.
  • Eligible fixed assets include real estate and equipment.
  • Cash out for operating expenses, including debt consolidation, is limited to 75 percent loan-to-value.
  • Cash out can be used for eligible business expenses (salaries, rent, utilities, inventory).
  • Existing government guaranteed loans are not eligible to be refinanced.
  • The eligible debt being refinanced is for the outstanding principal balance.

Other conditions or qualification requirements may apply. 

For those considering applying for a new loan, we offer a variety of government guaranteed loan products that require less cash investment up front and offer longer loan terms, which can help bridge the gap for businesses that otherwise would not have access to capital.

  • SBA 7(a), 504 and 504 refinance
  • SBA Export Express Export Working Capital International Trade
  • USDA Business & Industry Loans Food Desert Rural Energy for America Program (REAP)
  • Export Import Bank of U.S.

If you would like more information on the SBA 504 Refinance Program or any of our government-guaranteed loan products, please contact Leticia Scearce, Senior Vice President/Government Guaranteed Lending Manager, at lscearce@biltmorebankaz.com or (602) 445-6511.

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Beacon Economics: The Economic Outlook

Screen Shot 2015-06-05 at 2.24.22 PMRecently, Dr. Christopher Thornberg of Beacon Economics shared his 2016 economic forecast with us, taking a look back at past trends and addressing the outlook for the global, national and California economic markets.  The presentation, which includes detailed information that we hope will be useful to you and your business as you plan for the future, is now available here.↗

Dr. Thornberg is widely considered to be one of the nation’s leading economists. An expert in economic forecasting, regional economics, labor markets, economic policy and real estate analysis, he was one of the earliest and most adamant predictors of the subprime mortgage market crash that began in 2007. Prior to launching Beacon Economics, Dr. Thornberg was a senior economist with UCLA’s Anderson Forecast. Learn more about Beacon Economics here.↗

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Pacific Coast Regional – Help for Small Businesses and Entrepreneurs

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If you haven’t heard of Pacific Coast Regional Small Business Development Corporation (PCR), today may be your lucky day. The organization’s dedicated staff, led by CEO Mark Robertson, want to help you and your business. They do this primarily by offering classes for small business owners and entrepreneurs and by helping small businesses get the loans they need to accomplish their goals.

PCR, located in the Koreatown neighborhood of downtown Los Angeles, offers each of their small business development center (SBDC) classes every one to two months throughout the year. Want expert instruction about business development or management? Legal or financing issues? Marketing? Accounting? Quickbooks? Check out the PCR website↗ to see the latest training schedule for these classes and more. The sessions are very reasonably priced and are taught by experts.

Perhaps you want a one-on-one consultation with an expert about your business plan or your social media strategy? Believe it or not, PCR offers business consulting services for free. All you need to do is set up an appointment, which you can do online.↗

PCR is also an invaluable resource if you’re thinking of applying for a business loan. If you can’t quite meet all of your bank’s lending requirements, PCR will work with one of its network banks, including Grandpoint Bank, to co-sign with the borrower. This is possible by virtue of the California Small Business Loan Guarantee program↗ (SPLGP)

As one of nine state certified Financial Development Corporations, and a U.S. Treasury-certified community development financial institution (CDFI), PCR can provide up to an 80% loan guarantee (or a maximum of $2.5 million) to the bank to help you get the loan you need.  Any small business has the chance to qualify as long as it meets the standard SBA definition of a small business. “PCR not only facilitates loans, but sometimes a loan will be contingent on the business owner taking classes offered at PCR,” said David Ross, PCR chairman and Executive Vice President and Chief Credit Officer at Grandpoint Bank. “While the loan may provide the boost, the classes provide instruction for long-term success.”

In addition to its federal CDFI designation, PCR is one of less than 100 State of California-certified CDFIs and the only SBDC in Los Angeles County with internal lending capacity.

As such, and thanks to a generous $500,000 grant made by Comerica Bank in 2006, PCR can make micro-loans valued at $25,000 or less on its own.

PCR can also access a revolving loan fund of $3 million from the U.S. Department of Commerce Economic Development Administration, which allows Mark and his team to provide loans of up to $650,000 to qualified applicants.

“We hope our customers will graduate into a regular banking relationship, but the services and small loans we can provide in the interim help them to do that,” said Mark. Truly a one-stop-shop for Los Angeles County small businesses, PCR’s newest program helps businesses located along transportation corridors experiencing construction disruptions. While the public transportation upgrades driving the construction will eventually be a boon to these area businesses, Los Angeles County Metro realized that small businesses in particular may suffer during construction, so they teamed up with PCR to find a solution.

As a result, Metro’s Business Interruption Fund↗ is a $10 million grant fund that can provide grants up to $50,000 for revenue lost due to construction. During the 10 months the program has been operational so far, 104 grants were made for just under $2 million total.  In addition, PCR reports that they’ve received calls from several other transit and utility authorities from around the state and beyond contemplating similar programs and seeking advice.

With so many valuable programs, Mark estimates that PCR helps approximately 1,300 small businesses each year. As you might expect, he’s gotten a good sense of what it takes to succeed in business.

“Having expertise in the field you’re pursuing and gathering the right team of necessary experts, is the most essential component,” he said. “Also important is a desire to work extremely hard, a willingness to sacrifice and adequate capitalization.”

If you’ve already found success in business but want to help others do the same, PCR offers two ways to volunteer. Bankers and financiers are always needed to participate on PCR’s loan committee to help review and approve transactions. Or, you may be able to serve on the advisory board to provide advice and support for PCR’s small business development center.

The Small Business Administration funds part of the small business development center, and additional funds come through class fees and corporate sponsorships.

“We’ve been a sponsor of PCR since Grandpoint Bank was founded,” said David. “I’ve also served on the PCR board of directors since 2011 and on one of their loan committees before that. I find it very fulfilling working with this organization and seeing the companies they helped launch that are still going strong.”

In fact, David is fortunate to have a great frozen dessert shop in his neighborhood that received a loan and coaching from PCR 15 years ago. It’s still operated by the same owner, and like so many other PCR clients, that owner is creating jobs and contributing to the Southern California economy.

We’re proud to be affiliated with PCR, and we encourage you to take advantage of their programs and share this information with others.

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FBI Article: Ransomware on the Rise

We noticed that a lot of you really liked the last FBI cyber security article we ran. We’re pleased the Bureau has encouraged us to share their articles on this topic, so we’re happy to do so again. This article deals with a concerning type of cybercrime called ransomware, where a malware restricts access to the infected computer/network and demands that the operators pay some sort of ransom to regain control of their network. We hope this article is helpful to you. Please let us know if you have information or ideas on this topic that our readers may want to hear.

You can find this article, as well as many other articles you may find valuable to keep your business and staff secure against cybercrime, at this web address:

https://www.fbi.gov/news/stories/2015/january/ransomware-on-the-rise/ransomware-on-the-rise↗

For more information about fraud protection tools and product features provided by Grandpoint Bank, please visit our website.

Ransomware on the Rise
FBI and Partners Working to Combat This Cyber Threat

Your computer screen freezes with a pop-up message—supposedly from the FBI or another federal agency—saying that because you violated some sort of federal law your computer will remain locked until you pay a fine. Or you get a pop-up message telling you that your personal files have been encrypted and you have to pay to get the key needed decrypt them.

Screen Shot 2015-12-03 at 10.50.23 AMThese scenarios are examples of ransomware scams, which involve a type of malware that infects computers and restricts users’ access to their files or threatens the permanent destruction of their information unless a ransom—anywhere from hundreds to thousands of dollars—is paid.

Ransomware doesn’t just impact home computers.
Businesses, financial institutions, government agencies, academic institutions, and other organizations can and have become infected with it as well, resulting in the loss of sensitive or proprietary information, a disruption to regular operations, financial losses incurred to restore systems and files, and/or potential harm to an organization’s reputation.

Ransomware has been around for several years, but there’s been a definite uptick lately in its use by cyber criminals. And the FBI, along with public and private sector partners, is targeting these offenders and their scams.

Screen Shot 2015-12-03 at 10.47.22 AMWhen ransomware first hit the scene, computers predominately became infected with it when users opened e-mail attachments that contained the malware.
But more recently, we’re seeing an increasing number of incidents involving so-called “drive-by” ransomware, where users can infect their computers simply by clicking on a compromised website, often lured there by a deceptive e-mail or pop-up window.

Another new trend involves the ransom payment method. While some of the earlier ransomware scams involved having victims pay “ransom” with pre-paid cards, victims are now increasingly asked to pay with Bitcoin, a decentralized virtual currency network that attracts criminals because of the anonymity the system offers.

Also a growing problem is ransomware that locks down mobile phones and demands payments to unlock them.

The FBI and our federal, international, and private sector partners have taken proactive steps to neutralize some of the more significant ransomware scams through law enforcement actions against major botnets↗ that facilitated the distribution and operation of ransomware.

For example:

  • Reveton ransomware, delivered by malware known as Citadel, falsely warned victims that their computers had been identified by the FBI or Department of Justice as being associated with child pornography websites or other illegal online activity. In June 2013, Microsoft, the FBI, and our financial partners disrupted a massive criminal botnet built on the Citadel malware, putting the brakes on Reveton’s distribution. FBI statement↗ and additional details.↗
  • Cryptolocker was a highly sophisticated ransomware that used cryptographic key pairs to encrypt the computer files of its victims and demanded ransom for the encryption key. In June 2014, the FBI announced—in conjunction with the Gameover Zeus botnet disruption—that U.S. and foreign law enforcement officials had seized Cryptolocker command and control servers. The investigation into the criminals behind Cryptolocker continues, but the malware is unable to encrypt any additional computers. Additional details.↗

If you think you’ve been a victim of Cryptolocker, visit the Department of Homeland Security’s U.S. Computer Emergency Readiness Team (CERT) CryptoLocker webpage↗ for remediation information.

The FBI—along with its federal, international, and private sector partners—will continue to combat ransomware and other cyber threats. If you believe you’ve been the victim of a ransomware scheme or other cyber fraud activity, please report it to the Bureau’s Internet Crime Complaint Center.↗

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Cyber Security Article from the FBI

When our staff spotted this article, we knew it was something we wanted to share with our clients and readers. We contacted the FBI for their permission to reprint it on our blog, and they were kind enough to agree. You can find this article, as well as many other articles you may find valuable to keep your business and staff secure against cyber crime, at this web address: https://www.fbi.gov/news/stories/2015/august/business-e-mail-compromise/business-e-mail-compromise↗

For more information about fraud protection tools and product features provided Grandpoint Bank, please visit our website.↗

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Business E-Mail Compromise
An Emerging Global Threat

08/28/15

The accountant for a U.S. company recently received an e-mail from her chief executive, who was on vacation out of the country, requesting a transfer of funds on a time-sensitive acquisition that required completion by the end of the day. The CEO said a lawyer would contact the accountant to provide further details.

“It was not unusual for me to receive e-mails requesting a transfer of funds,” the accountant later wrote, and when she was contacted by the lawyer via e-mail, she noted the appropriate letter of authorization—including her CEO’s signature over the company’s seal—and followed the instructions to wire more than $737,000 to a bank in China.

The next day, when the CEO happened to call regarding another matter, the accountant mentioned that she had completed the wire transfer the day before. The CEO said he had never sent the e-mail and knew nothing about the alleged acquisition.

The company was the victim of a business e-mail compromise (BEC), a growing financial fraud that is more sophisticated than any similar scam the FBI has seen before and one—in its various forms—that has resulted in actual and attempted losses of more than a billion dollars to businesses worldwide.

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“BEC is a serious threat on a global scale,” said FBI Special Agent Maxwell Marker, who oversees the Bureau’s Transnational Organized Crime–Eastern Hemisphere Section in the Criminal Investigative Division. “It’s a prime example of organized crime groups engaging in large-scale, computer-enabled fraud, and the losses are staggering.”

Since the FBI’s Internet Crime Complaint Center (IC3) began tracking BEC scams in late 2013, it has compiled statistics on more than 7,000 U.S. companies that have been victimized—with total dollar losses exceeding $740 million. That doesn’t include victims outside the U.S. and unreported losses.

The scammers, believed to be members of organized crime groups from Africa, Eastern Europe, and the Middle East, primarily target businesses that work with foreign suppliers or regularly perform wire transfer payments. The scam succeeds by compromising legitimate business e-mail accounts through social engineering or computer intrusion techniques. Businesses of all sizes are targeted, and the fraud is proliferating.

According to IC3, since the beginning of 2015 there has been a 270 percent increase in identified BEC victims. Victim companies have come from all 50 U.S. states and nearly 80 countries abroad. The majority of the fraudulent transfers end up in Chinese banks.

Not long ago, e-mail scams were fairly easy to spot. The Nigerian lottery and other fraud attempts that arrived in personal and business e-mail inboxes were transparent in their amateurism. Now, the scammers’ methods are extremely sophisticated.

“They know how to perpetuate the scam without raising suspicions,” Marker said. “They have excellent tradecraft, and they do their homework. They use language specific to the company they are targeting, along with dollar amounts that lend legitimacy to the fraud. The days of these e-mails having horrible grammar and being easily identified are largely behind us.”

To make matters worse, the criminals often employ malware to infiltrate company networks, gaining access to legitimate e-mail threads about billing and invoices they can use to ensure the suspicions of an accountant or financial officer aren’t raised when a fraudulent wire transfer is requested.

Instead of making a payment to a trusted supplier, the scammers direct payment to their own accounts. Sometimes they succeed at this by switching a trusted bank account number by a single digit. “The criminals have become experts at imitating invoices and accounts,” Marker said. “And when a wire transfer happens,” he added, “the window of time to identify the fraud and recover the funds before they are moved out of reach is extremely short.”

In the case mentioned above—reported to the IC3 in June—after the accountant spoke to her CEO on the phone, she immediately reviewed the e-mail thread. “I noticed the first e-mail I received from the CEO was missing one letter; instead of .com, it read .co.” On closer inspection, the attachment provided by the “lawyer” revealed that the CEO’s signature was forged and the company seal appeared to be cut and pasted from the company’s public website. Further assisting the perpetrators, the website also listed the company’s executive officers and their e-mail addresses and identified specific global media events the CEO would attend during the calendar year.

The FBI’s Criminal, Cyber, and International Operations Divisions are coordinating efforts to identify and dismantle BEC criminal groups. “We are applying all our investigative techniques to the threat,” Marker said, “including forensic accounting, human source and undercover operations, and cyber aspects such as tracking IP addresses and analyzing the malware used to carry out network intrusions. We are working with our foreign partners as well, who are seeing the same issues.” He stressed that companies should make themselves aware of the BEC threat and take measures to avoid becoming victims (see sidebar).

If your company has been victimized by a BEC scam, it is important to act quickly. Contact your financial institution immediately and request that they contact the financial institution where the fraudulent transfer was sent. Next, call the FBI, and also file a complaint↗—regardless of dollar loss—with the IC3.

“The FBI takes the BEC threat very seriously,” Marker said, “and we are working with our law enforcement partners around the world to identify these criminals and bring them to justice.”

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This icon appears next to every link that directs to a third party website not affiliated with Grandpoint Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Grandpoint Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Grandpoint Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.

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Nine Tips for Better Cyber Security

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Our Increasing dependence on information technology and networks has brought tremendous efficiency to our work and personal lives, but with these efficiencies come risks; particularly risks from cybercrime. According to an October 2014 independent study conducted by Ponemon Institute, the percentage of businesses impacted by malware and other kinds of cyber fraud is up 144 percent, and a survey by Experian↗ found that 60 percent of small businesses that suffer a cyber attack are out of business within one year due to the costs of customer notification, lawsuits, etc. Small and medium-sized businesses can be especially vulnerable since they often do not have the same level of resources as larger companies to defend their information technology systems and track their financial transactions on a frequent or daily basis. While protecting your business against cyber criminals may require a combination of special resources and a change in workplace procedures, here are a few basic steps that you can take at work and at home to reduce your risk of being hacked, spoofed, falling victim to computer viruses and Trojan horses or having your identity stolen.

  1. Keep your computer secure. Install and run anti-virus and anti-spyware and make sure you keep these up to date to protect against new threats. Use the latest versions of Internet browsers, such as Firefox, Google Chrome and Internet Explorer, and make sure your operating system and applications are updated regularly.
  2. Use a separate, dedicated computer for online banking – this decreases your chance of infection with malware because you are unlikely to encounter these programs on trusted banking sites. Do not use this computer for general web browsing and email.
  3. Never share usernames and passwords –use strong passwords with a combination of lower and upper case letters, numbers and symbols, and change your passwords if you suspect they could have been compromised. Use different passwords for the main applications you use. For example, your online banking password should be different than your email password.
  4. Use email safely. Don’t click on links within your email – instead, open your browser and search for the company that supposedly sent the link. Be cautious about opening attachments or downloading files from unfamiliar sources. These files can contain viruses or other software that can jeopardize your computer’s security.
  5. Don’t give out personal information over the phone or via email unless you have initiated the contact. Even if the email looks like it’s coming from someone you know, the person’s email may have been hacked.
  6. Never use unprotected Internet connections – In addition to using only secure connections, make sure websites asking for sensitive information are secure. These websites will show up in your browser with a lock icon in its toolbar that, when clicked, should display an info sheet, including the company’s name. Also, the URL should start with “https” instead of “http.”
  7. Educate your employees, family, housemates or anyone else who has access to your computer network and/or your financial information about cyber security best practices. You should also discuss monitoring account information and billing statements regularly for unauthorized charges and withdrawals.
  8. Do not keep your passwords on your computer in a Word document. While this practice is convenient for cutting and pasting and may protect against key logging software that can grab your keystrokes, this technique leaves the user vulnerable to clipboard loggers that capture the contents of the clipboard. Documents on your computer, even when password protected, are also vulnerable to skilled hackers. A better idea is to use a password manager program – some of which are free. PCMag.com offers an overview of these programs here.↗
  9. Ask your bank what they are doing to assist you in cyber fraud prevention. At Grandpoint Bank, our online banking platform offers tools, such as Trusteer Rapport,↗ which works alongside your current security software to add protection and decrease your susceptibility to criminal behavior, protecting you and your business from threats your antivirus cannot. We also offer features like Security and Transaction Alerts that can help clients protect themselves from fraud. Businesses using online banking also have access to security features such as dual control and user limits, along with Treasury Management products like ACH Fraud Protection, Positive Pay, and out-of-band authentication and secure access codes to protect ACH and wire transactions. And, we continually invest in back office resources to help detect potentially fraudulent transactions.

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This icon appears next to every link that directs to a third party website not affiliated with Grandpoint Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Grandpoint Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Grandpoint Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.

How to Choose a Commercial Bank – Start With the Banker

The following excerpt is from an article authored by Stephen Friedman, Executive Vice President and Regional Manager at our division, Regents Bank in San Diego. He represented the client service philosophy of Grandpoint Bank and its divisions so well, we wanted to share this with you. The full article originally appeared on the Renaissance Executive Forums↗ website.

By Stephen Friedman, Executive Vice President & Regional Manager at Regents Bank

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Product Based Criteria – Branches, Rates, Terms, Fees

As a commercial banker out in the marketplace peddling my wares, this is a topic that I discuss with business owners on a daily basis. If I am to convince a company to move its business over to my bank, the first thing I need to figure out is what they are looking for. What are the criteria that they will use to make a decision? No business owner wakes up in the morning thinking, “You know what, I am going to change my banking relationship today. I have been with my existing bank long enough and it’s time for a change.” No, a business owner would generally prefer a root canal over changing banks. Their call to me is usually triggered by one of three things, 1) A credit need that is not being addressed to the company’s satisfaction by the incumbent bank, 2) A negative service event that crossed the company’s pain threshold, or 3) Price shopping.

Over time I have found that the primary reason the company has reached this point with their existing bank is because they used the wrong criteria in selecting their bank in the first place. For businesses that are not heavy users of credit, the initial banking decision was usually based on which of the major banks had the closest branch location, were offering the best deal or already provided personal banking to the company’s owners. For heavy users of credit, the decision generally came down to the most lenient loan terms and/or the lowest pricing. These are product-based decisions in an industry where the products have become commodities. So if bank selection is based on product differentiation and pricing, you might as well put on the blindfold, get spun around three times and see if you can pin that tail on the donkey.

Bank Financial Strength is a Given

Then what are the right criteria to use in making your banking decision? Let’s take it as a given that you only want to work with banks that are financially strong. While this can take a little digging to uncover, the information is readily available on the FDIC’s website, as well as through different bank rating services like bankrate.com and BauerFinancial. A financially troubled bank, particularly one operating under a regulatory enforcement action, will likely be restricted by the regulators from providing you the commodity-like products and services at competitive prices I mentioned earlier. More importantly, the bank will be inwardly focused. Satisfying regulatory concerns will trump satisfying you, the client.

Knowledge-Based Criteria – Your Banking Team is the Differentiator

Once you’ve cleared the financial hurdle and are only focused on financially strong banks, I believe that the most important consideration in choosing a bank is the team of bankers with whom you’ll be working. Not to say that the bank itself is unimportant, it’s just less important than the bankers you are working with directly. Since the products themselves are commodities, your banking team is the key differentiating factor. And guess what? Your banker is practically free. There is no extra fee or charge levied on your bank statement for banker time and talent devoted to you. It comes with the account. Banks that compete on price, if they want to be profitable, have to have a low cost structure. Since the principal cost for a bank is people, that means they must pay their people less, which results in a lower level of competency. This is particularly true when it comes to small to mid-size business banking, which I equate to businesses with less than $40 million in sales. If your bank is doing both, offering the most competitive prices and has the most talented bankers, then be careful. Their economic model is flawed and will likely catch up to you as the client in some way as time goes on.

Keeping the Credit Spigot Open is the Key to Growth

So why is having an experienced, technically competent banking team important, and what kind of value should you expect them to bring to your business? Helping to address and resolve issues surrounding finance is where a skilled banker can have the most direct, positive impact on your company. This is particularly relevant for credit-intensive businesses. Small to mid-size businesses often don’t have room in their cost structure for a full time Chief Financial Officer. The CEO/Owner knows the numbers, but generally from a different perspective than the CFO. CEOs intuitively understand return on investment, without the need for detailed spreadsheets and graphs, but generally are much less focused on the balance sheet and other key financial measurements and analysis. A good banker can help you in all of these areas.

The importance of this financial expertise to your business cannot be overstated. I believe that one of the most important factors in a company’s long term success is continuous access to capital, both debt and equity capital. What determines this is a company’s level of profitability and growth in relation to its level of debt. Bank debt is the cheapest form of capital, therefore the more you can borrow as part of your overall capital requirements, the higher the return on your equity investment in the short term. The flip side is that the more you borrow, the greater the financial risk in your business. Banks want to get paid back faster than other forms of capital, which increases the fixed cash outflows of your company and therefore raises the sales level required to break even. The bank also has a priority security position in the assets of the company, so if you can’t meet your break even sales level, you are at risk of losing everything. Working with a banking team that understands this and advises you accordingly is worth its weight in gold. On the surface, the banker who can get you the most credit with the most lenient terms at the lowest price would seem to be the obvious choice. But it is often the beginning of a company’s demise. Without the financial expertise as to how to appropriately use such a credit facility, it’s like being handed a loaded gun without any firearms training.

Credibility – You Work So Hard to Build It, but It Can Crumble in a Second

In addition, the bankers with which you work are your advocates and spokespeople within the bank, especially when it comes to credit-related issues. The ultimate decision maker within the bank needs to have all of the relevant information in an understandable format in order to reach the appropriate conclusion. You need to be confident that your banking team can accomplish this on your behalf.

A company rarely evolves in a linear fashion. There are peaks and, inevitably, valleys. A good banker is going to maintain an ongoing dialogue with you and be proactive in addressing small problems before they become big ones. Your banking team members will share information with each other to ensure that all key players are informed so that surprises are kept to a minimum. That way your credibility is maintained, as well as your bankers’. Our role is to provide you with the information that you need as a business owner to make tactical adjustments so that you don’t jeopardize access to bank credit, your cheapest source of capital.

Conclusion – A New Vision of your Bank

I encourage you to think of your bank differently. A bank’s products are commodities, but its people can prove to be an invaluable resource in your company’s success. Your banking team should offer a separate and distinct set of skills that you can rely upon to help you to make the right strategic decisions in leading your company forward.

And while changing banks can be perceived as being as desirable as a root canal, it’s really not that bad. I would think of it more in terms of your bi-annual dental checkup and cleaning: It’s a little bit of a nuisance, but it sure feels good when you’re done.

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Business Tips for the New Year

Happy 2015! With the dawning of the New Year, many folks concentrate on getting their business affairs in order. Before we get too much further into the year, we’d like to share a few business tips and highlights of new laws that can help you hone your competitive edge.

Business Tips

  • Review your cyber security.Ensure that your anti-virus software still meets your security needs, and check regularly for software and operating system updates and patches. Other preventive measures include providing firewall security for your Internet connection and encourage or require employees to password protect and use security apps on any of their handheld devices that may contain data pertaining to your business. Be sure to train your employees in all security protocols.
  • Stay up to date on compliance deadlines. Be aware that states periodically change compliance deadlines, forms and fees. Reviewing these details well in advance can help you avoid late fees and loss of good standing. Schedule Outlook or smart phone reminders to stay on top of deadlines.
  • Revisit your business plan. You went through all that trouble to create a great plan to take the business world by storm, so it shouldn’t be left idle….
  • Rev up your professional networking. Even if you’re already a power networker, review your business association memberships and decide which are still relevant to you and how they fit into your budget. Consider whether you should expand your networking circle, and don’t forget to consider conference and convention opportunities for 2015. Get your employees involved too. They’ll benefit from the new connections, continuing education opportunities and the satisfaction of attracting new customers to your business.
  • Reassess your online brand. If you don’t already have a Google Alert set for your company, do it now. Consider adding Google Alerts for the names of your top executives and any branded products or services you provide. Look up your company’s name on search engines to see how quickly your firm pops up. If your online brand is suffering, either from negative reviews, an outdated website or lackluster search engine optimization, don’t wait to address the issues. First impressions are hard to reverse.

New Laws

California has several new laws taking effect in 2015 that may impact California businesses. A few of those include:

  • Mandatory Paid Sick Leave.  Starting July 1, all California employers are required to provide paid sick leave to any employee who works in California for 30 days, at an accrual rate of one hour for every 30 hours worked.
  • Harassment Training. Starting January 1, employers who employ 50 employees or more anywhere are now subject to mandatory sexual harassment prevention training to all California-based supervisors to include the prevention of “abusive conduct.
  • Unpaid Interns & Volunteers. Starting January 1, unpaid interns and volunteers are now entitled to protection from harassment, discrimination and retaliation.

Additional laws affecting California businesses will take effect this year, so please consult with your attorney and/or human resources professional for more information about all new legislation that may affect your business in 2015.

A new year is full of possibilities. We hope this article is helpful in supporting all the grand plans your firm will implement this year. At Grandpoint Bank, we are proud to be a business partner for our clients as they continue to lead and transform their industries, and we look forward to working with you to make all of your New Year’s possibilities become realities.

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