“In any type of financial turmoil, opportunities emerge, and that’s when companies with vision, foresight
and agility can change their fortunes dramatically
for the better.” - Fred Reid, CEO, FlexJet

Any business owner or chief executive can tell you that 2009 has been a year of unique and difficult challenges.  There is consensus among business leaders that the economic landscape is still in the process of dramatic change.  It is interesting to see how businesses are coping with and adapting to the new economic reality that has arrived.  The Bank Business Pulse has been published for the last ten years by a consortium of regional and community banks – this study interviews business owners and chief executives of small to medium sized companies across the country to track the top challenges that they expect to face in the coming year.  When reviewing the current Bank Business Pulse study it is interesting to note that two of the most significant challenges reported this year had never made the list before.  Not only has the economic landscape changed dramatically but according to business owners and chief executives they are facing challenges that have never been faced before.

The number one challenge is really not a huge surprise but what is surprising is the dramatic spike in the reported significance of the challenge.  This year (as well as the last two years) the top challenge that business owners and chief executives say they face is Increasing Sales.  The previous two years only 47% and 44% considered this challenge to be Very Significant however this year the figure jumped to 77%. 

The second most important challenge is intriguing because it has never made the list in the ten year history of the survey.  53% of business owners and chief executives said the challenge of Operating in the Context of Financial Uncertainty will be a Very Significant challenge, and 32% reported that it will be Moderately Significant.

One other brand new challenge to the list is Operating with Increasingly Tight Credit which was reported as a Very Significant challenge by 28% of the business owners and chief executives.   

These last two responses went from not even being on the radar screen to becoming some of the top challenges that business owners and chief executives expect to be facing in the coming year.  This underscores how dramatic the economic shift has been and implies that the new challenges will be met and overcome only by those that have evolved along with their environment. 

Year over year revenue growth is no longer automatic.  Easy access to credit and artificially low interest rates are a thing of the past.  As we wrote in the last newsletter there will be winners and losers when we look back on the Great Recession with the benefit of historical hindsight.  Business owners and chief executives that are prudent and methodical are positioning their companies for long term prosperity. 

The environment for business financing has changed dramatically as well – the evolution began over a year ago.  The heavy reliance on credit scoring has for the most part gone away.  The days of automated credit approvals with minimal if any financial disclosure are gone.  It wasn’t long ago that lenders were perpetually competing based upon who could approve the largest dollar amount with the smallest amount of information and in the shortest amount of time.  There were banks and independent equipment finance firms issuing approvals for up to $250K with virtually no information on the prospective borrower.  Many of these firms have been completely decimated and it is highly unlikely that these policies and procedures will ever be repeated.

Every industry is evolving and the companies that want to excel are evolving along with their environment.  First Star Capital is no different and the equipment finance industry is a great example.  The environment has changed and the prevailing school of thought is to pursue quality over quantity.  We are still doing plenty of business and are actively lending money.  The companies that present thorough and compelling requests are consistently being approved.  We want to make good decisions and the more thorough and compelling the request is the more we will bend over backwards to approve it.  Even though this may seem obvious we are still receiving a fair amount of incomplete or incoherent requests.  The companies that are well organized and can articulate why their request makes sense and why they are a good credit risk are not having a hard time getting funded.  However the companies that supply incomplete information and then do not follow through on requests for additional supporting documentation are not doing themselves any favors.  These circumstances ring true regardless of the requested dollar amount. 

First Star Capital is here to help your company obtain equipment financing when it is needed.  Whether it is next week, next month, or next year, we will be here to help and our entire team looks forward to being a valuable financing resource for your company in the years ahead.

About First Star Capital

First Star Capital is an established national firm that has financed thousands of different businesses across the country and has funded hundreds of millions of dollars worth of capital equipment. We are an independent commercial lender with a specialty focus in equipment financing and leasing. First Star Capital is a direct lender with the ability to quickly and efficiently fund new financing requests between ten-thousand and ten-million dollars. Since we are a direct lender with our own funding and servicing capabilities we are able to deliver tangible value added financing solutions with the utmost flexibility. First Star Capital has the internal ability to underwrite a variety of different financing requests – nothing is too big or too complicated.

First Star Capital

(800) 604-4817

Brad@FirstStarCapital.com

www.FirstStarCapital.com

Did You Know?

Nobel Peace Prize interesting facts:

The committee does not release the names of any candidates and keeps records sealed for 50 years.

To date, the youngest Nobel Peace Prize Laureate is Mairead Corrigan, who was 32 years old when she was awarded the Prize in 1976.

The oldest Nobel Peace Prize Laureate to date is Joseph Rotblat, who was 87 years old when he was awarded the Prize in 1995.

Many believe that Winston Churchill was awarded the Nobel Peace Prize, but he was actually awarded the 1953 Nobel Prize in Literature.

Each winner of a Nobel Prize, which can go to individuals and institutions, takes home a medal, a diploma, and cash, which varies each year and depends on the income earned on the Nobel Foundation fund. In 2008, winners recipients receive 10 million Swedish kroners, or about $1.72 million.

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