Challenges & successes in local lending

Improved marketing may be key to increasing business lending in SW WA, officials say

Wesley Dameron

Reaching the two-year mark is a milestone for small businesses. Not only can owners celebrate the survival of their life’s work, but doors to one of the most vital resources – capital – also begin to open up.

G6 Airpark in Vancouver recently reached this milestone. The local business is a trampoline park, a place where children and adults alike can play on wall-to-wall trampolines. But for owner Wesley Dameron, the past two years have not always been easy. He faced some hurdles to accessing capital for his young and innovative business.

“With traditional financial institutions, it can be hard at times for smaller businesses and startups to obtain financing for a number of reasons,” Dameron said. “The underwriters are a little gun shy after the downturn five or six years ago and they’re just getting back into it. We’re just a micro amount of their business, so we don’t have any leverage.”

Dameron explained that lenders were wary of a few aspects of their business: the relative newness of the trampoline park industry, or the legal liabilities for personal injury. Now that the business is more than two years old, Dameron said more opportunities will present themselves, if he should need them.

“You get your loans when you don’t need it,” he said. “That’s kind of how it always works. That’s what happened to us, too.”

Cantwell report

Senator Maria Cantwell recently voiced concerns over the challenges that small business owners like Dameron face. Cantwell chairs the U.S. Senate Committee on Small Business & Entrepreneurship, which released a report in April showing that small business lending in Southwest Washington is lagging behind other areas of the state. The report was based on data from the US Small Business Administration (SBA).

According to the report, the Portland SBA district, which includes Southwest Washington, is the only market on the West Coast where approved loan numbers are down from six years ago. Although the overall decrease for the region was only 4.7 percent, loans in Clark and Cowlitz counties decreased by 16.2 and 33.3 percent, respectively, from 2009 to 2014.

Cantwell held a field hearing in Vancouver to examine ways to improve the lending environment in Southwest Washington. She focused mainly on SBA loans, which are backed by the federal government in order to encourage lenders to open access to capital. These can be especially valuable for businesses that have faced difficulty in obtaining traditional financing.

Cantwell heard testimony from small business owners, lenders and economic development leaders like Mike Bomar. Bomar, president of the Columbia River Economic Development Counsel, believes that the statistics may be indicative of a marketing opportunity.

“Businesses may not understand what the opportunities are,” he said. “Our approach following that hearing and the release of that information has been working with the chamber, the SBA and other lenders in the area to figure out a game plan for better marketing.”

Bomar was nonetheless optimistic.

“The good news is, I think that things have been at a sluggish but steady climb the last couple of years, and that’s starting to build a record,” he added. “If there’s a new lending environment that emerged out of the last recession, that’s something that businesses should be aware of.”

Kelly Parker, president and CEO of the Greater Vancouver Chamber of Commerce, further explained the marketing approach that Bomar mentioned.

“All the information is online in most cases, but business owners who juggle dozens of priorities in any given day need a little help in translating whether a government loan may work for them,” she said. “Face to face conversations are still the best way to connect.”

Cantwell’s report also demonstrated some successes. Camron Doss, district director for the Portland SBA, highlighted the positive aspects of the Committee’s findings.

“The amount of loans [SBA lenders delivered] from October 1, 2013 through the end of June 2014 is pretty much in line with what they were the previous years during that time frame,” he explained. “In Southwest Washington, in 2012, we had 69 loans. In 2013, there were 75 loans. Through June 2014, we’re at 74 loans. We’re pretty much in line with where we were the previous years.”

Doss explained that, nonetheless, the Portland SBA is working hard to reach out to the Washington portion of its district. In June, the Portland branch held four events to promote its lending programs in Southwest Washington. Doss also said they plan to start a “meet a mentor” program in the area in September to focus on their micro-lending options.

“We are aggressively trying to make sure our SBA message is being heard by our customers in Southwest Washington,” he said.

The recovering economy also may play a role in the mixed numbers the Cantwell report outlined. Bob Harding, president for the greater Portland market of Pacific Continental Bank, explained this further.

“As businesses have regained their footing, banks are looking less and less to the SBA to shore up credit weaknesses that were more prevalent just a couple years back,” he said. “We at Pacific Continental Bank are actively lending in the greater Vancouver market and have seen a substantial increase in lending activity in the past year.”

Personal relationships: the key to future successes in lending?

Despite the mixed reports and potential opportunities for lending in Southwest Washington, obtaining capital is certainly not impossible. Bruce Davidson, owner and president of Davidson & Associates Insurance Agency in Vancouver, said that the lending process happened easily for his company. Davidson & Associates will move into the Esther Short Building in September, and needed some financing to make improvements to the new space.

Davidson said access to capital increases when business owners build a team of advisors, one of which should be a banker.

“If you have a relationship and those [advisors] know and understand your business, when you have a need that falls into their area, dealing with that need is not a big deal,” he said. “I think that it behooves businesses to have a relationship before you need to go borrow money.”

Dameron, the owner of G6 Airpark, also advised that local startups in need of capital develop personal relationships, but had a slightly different view.

“Make friends with rich people,” he chuckled. “Have friends who have a boat. That’s what I suggest!”