When Donna Hamilton and I meet with clients, especially ones we do not see often, they often mistakenly say “Oh yeah, you guys work for the SBA.” When I hear that I cringe just a little. The SBA, or Small Business Administration, has been a boon to small business growth in the United States and very nearly or completely pays for its existence every year. The way it collateralizes loans or assumes part of the lending risk has helped thousands of business either get started or expand. It is a good program from the federal government and it works. However, hearing those words “You work for the SBA” still gets under my skin.
Enterprise Development is a not-for-profit privately held corporation. We are a small business and have all of the issues and problems that every other small business faces. Basically, Enterprise Development contracts with the SBA to service loans. We don’t get paid until the loan is approved and closed. We then get closing fees and monthly servicing fees. Out of that revenue comes salaries and benefits (kids got to eat), rent and utilities (got to stay dry and warm), telephone and Internet (so we can talk to our clients) and so on. As you can see, this is a small business and as a small business we face the same issues that our clients face every month.
With this information in mind, it is easy to see how changes in our loan portfolio can seriously affect the organizations bottom line. Every time a client prepays a loan or does not make a monthly payment, our revenue decreases. Conversely, every time we close a new loan revenue increases. Revenue minus expenses equals net profit. We understand this basic business equation because we live it every day.
I think this information is important for all of our borrowers and potential borrowers to know because it will hopefully show them that we empathize with them and what they are trying to accomplish. We have probably experienced many similar problems and celebrated similar victories. We have no one to bail us out if things don’t go well. We are a business… Just like you.
President Reagan said “The scariest words in the English language are..,”We are with the federal government and we are here to help.”” So when we meet with clients and say we are here to help, it should not be scary at all. Our success is completely entwined with their success. ..From one small business to another...
Mike Schrader
Enterprise Development is a not-for-profit privately held corporation. We are a small business and have all of the issues and problems that every other small business faces. Basically, Enterprise Development contracts with the SBA to service loans. We don’t get paid until the loan is approved and closed. We then get closing fees and monthly servicing fees. Out of that revenue comes salaries and benefits (kids got to eat), rent and utilities (got to stay dry and warm), telephone and Internet (so we can talk to our clients) and so on. As you can see, this is a small business and as a small business we face the same issues that our clients face every month.
With this information in mind, it is easy to see how changes in our loan portfolio can seriously affect the organizations bottom line. Every time a client prepays a loan or does not make a monthly payment, our revenue decreases. Conversely, every time we close a new loan revenue increases. Revenue minus expenses equals net profit. We understand this basic business equation because we live it every day.
I think this information is important for all of our borrowers and potential borrowers to know because it will hopefully show them that we empathize with them and what they are trying to accomplish. We have probably experienced many similar problems and celebrated similar victories. We have no one to bail us out if things don’t go well. We are a business… Just like you.
President Reagan said “The scariest words in the English language are..,”We are with the federal government and we are here to help.”” So when we meet with clients and say we are here to help, it should not be scary at all. Our success is completely entwined with their success. ..From one small business to another...
Mike Schrader
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