relationship banking copy

darrell byersBy Jennifer Rodriguez
President & CEO
The Greater Philadelphia Hispanic Chamber of Commerce (GPHCC)

GPHCC is a local partner in Accelerate Latinx powered by Interise

As the President & CEO of the Greater Philadelphia Hispanic Chamber, I am concerned every time I hear small business owners who want to scale their business reject debt as a tool for growth. Why is debt so misunderstood?

I will not forget a very successful Latina entrepreneur speaking at a panel about her ambition to sell products to Walmart, yet, her scaling plans did not include any form of debt. I remember thinking, not only that it would be nearly impossible to self-finance that level of growth, but also, that she had probably missed many opportunities along the way, simply because debt was not part of her entrepreneur’s toolbox.

I often advise business owners that debt comes in many shapes and sizes and that what is appropriate depends on their needs and the stage of growth.  

Assuming the business is credit-worthy, one of the first things to determine is whether the business needs a one-time infusion of cash or whether the need is recurring. Is it for start-up costs, machinery & equipment, to purchase a building or to cover cashflow deficiencies due to contract payment terms? For each of these situations there is a different debt solution, ranging from venture capital and leasing, to loans and lines of credit.

Also, it is important to note that, just like there is a different doctor for every major disease, there are financial services institutions that specialize in specific sectors or products. 

While banks may be the first thing you think about in terms of lending, the fact is that businesses looking for small loans may be well served by seeking a credit union. If, in addition to capital, the business owner needs technical assistance, a local CDFI (Community Development Financial Services Institution) could be a good option. If the business has a great story of origin or impact, and they are savvy social media marketers, a crowdsourcing platform like Kickstarter may be an alternative. Then, there are the many incentives and programs that local and state governments create to boost economic development, which are often a complicated alphabet, with equally tortuous application processes…. No wonder why entrepreneurs become frustrated!

So, let’s say you are an ambitious entrepreneur with lofty goals, what should you do? 

First, I would say that this is not the time for a DIY project. You need an expert. I would recommend finding a relationship counselor of sorts, an organization that is well-known for its business network and resources. This could be a chamber of commerce, a Small Business Development Center (SBDC), or an industry-focused affinity group. The staff of these organizations act like general practitioners; they perform an initial assessment and match you with the resources and experts that meet your needs. They will save you time, money and you will develop a support group along the way.