2010-12-01 Eagan Business NewsFourth Quarter 2010 Vol. 9 No. 4
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InBusiness News
JOURNAL OF THE EAGAN BUSINESS COMMUNITY
Banking these days
Credit has tightened. Banks aren't
lending. It's tough out there.
Small-business owners have been hearing all
that for nearly two years. That's old hat.
But have you also heard that banks' practices
are changing? That they've gone back to the
1980s model of lending — the one adopted
after the last big recession? That lenders,
who focused mostly on collateral during the
go-go '90s, are now concentrating on the
good old 5 c's: cash flow, collateral, capital,
character and conditions?
Talk to Eagan bankers today, and their refrain
is the same:
"Everyone's focusing on the fundamentals,"
says Bill Swanstrom, president of Minnwest
Bank, Eagan. "The bank is looking at busi-
nesses and saying, 'We've got to manage our
credit, and you've got to manage your credit."
In other words, he explains, businesses must
be as focused on their receivables as a bank
is on collecting its loan payments.
"For too many years, things were too loose,"
says Karen LaBate, assistant vice-president,
Business Banking,
Associated Bank,
Eagan. "Constraints
weren't put in place,
I
JMB"'
Swanstrom,
resident of
innwestBank,Eagan
Karen LaBate,
assistant vice
president, Business
Banking,Associated
Bank, Eagan &I
things were inflated. Everyone was living the
good life and thought it would keep going."
Two years since the bottom fell out, obviously,
that's not the case. So what does that mean
for businesses today?
First, it means banks increasingly have
been offering workouts, whereby business
owners meet loan commitments by satisfying
altered payment terms.
While Swanstrom believes that the number
of workouts have likely hit their peak,
many businesses continue to move through
the process.
Facing a workout? "My advice would be to
show great character, be forthright and
don't expect the bank to come up with all the
solutions," Swanstrom says, adding that often
a business owner doesn't offer the whole
picture to his or her banker and may even
be hostile.
"The bank really holds the future of the
business in its hand," he says, "So it's
important to be honest and cooperative so
the two can work together."
continued on page 2
Fourth Quarter 2010
JOURNAL OF THE EAGAN BUSINESS COMMUNITY
Women execs provide hope for tomorrow
Opportunities to volunteer rarely relate to work lives. Hope for
Tomorrow presents one of the rare exceptions.
The 13 -year-old local organization invites female executives to
mentor junior -high girls in the south metro, including Eagan.
Among the dedicated volunteers is Cindy Johnson, president
of CL Johnson Consulting and former president of the Dakota
County Regional Chamber of Commerce. "If you want to make a
difference in a young girl's life, Hope for Tomorrow is great,"
says Johnson, who began this fall her fourth year as a volunteer.
"It's really a positive experience to see the girls who are shy then
begin talking, contributing and bringing up ideas."
Prepping for another Hope for Tomorrow session are mentors Ruthe
Batulis (left), president of the Dakota County Regional Chamber of
Commerce, and Cindy Johnson, president of CL Johnson Consulting.
Banking these days continued from page 1
Second, banks have begun to grant loans again.
"Borrowers are more educated today than they were," says
LaBate, pointing out that business owners know they can no
longer expect a loan as was true even a few years ago. She
also notes that by working at a small bank — "There's no
800 number, no handing off" — she is able to become a
strategic partner of her business clients.
Need a business loan? To begin, she advises offering a
complete financial package — tax returns, budget, a plan
and more. Among the businesses to which her branch
has been able to make loans in the past six months are a
2 Eagan Business NEWS
"We learn as much from the girls as they learn from us."
— Karen LaBate, Hope for Tomorrow mentor
Participants are selected by principals and guidance
counselors, who choose young women based on their need
for positive female role models in their lives.
"I remember what it was like to be in eighth grade," says
mentor Karen LaBate, assistant vice president, Associated
Bank Minnesota in Eagan. "Had I had a professional
woman to talk with, listen and learn from, that would have
been fabulous."
Both Johnson and LaBate volunteer at Metcalf Junior High,
where nine mentors were paired with nine young women in
October. Ten more mentors and girls were paired at Dakota
Hills Middle School. The pairs meet monthly to discuss such
topics as careers, college and more. Last month, a speaker
from 360 CommunitiesTm addressed the entire group about
bullying and self-esteem.
"The girls talked about taking the high road — about how
they must stand up for others," says LaBate. "I'm so
impressed by these young ladies. They're making great
choices and they're so smart."
Adds Johnson: "Sometimes people do volunteer work
and never see the impact. With this, you directly see
the impact."
To learn more or to get involved, visit
www.hopefortomorrowmentoring.org. Or contact
Ruthe Batulis, director of the Dakota County Regional
Chamber of Commerce at rbatulisodcrchamber.com
or call 651-452-9872. ■
specialty trade contractor, an auto repair shop, and home
improvement businesses.
"Our first stop is to use a Small Business Administration loan,
which gives the bank some protection against risk," says
Swanstrom, noting that SBA loans are the preferred financial
vehicles at many banks these days. Both Minnwest Bank and
Associated Bank are SBA -preferred lenders.
Of course, even if all is are crossed and all is are dotted,
not every business owner can get a loan; in fact, roughly
half the small businesses applying for credit are denied,
according to a study by the Federal Reserve Bank of New
York. That's especially true among businesses hit hardest
during the recession. Restaurants, recreational facilities, and
JOURNAL OF THE EAGAN BUSINESS COMMUNITY
Riding the wave
As the economy plunged, the receivership business swelled.
The vast majority of businesses don't welcome receiverships.
Not so for JBL Companies.
Twenty years ago, Jeffrey Larson, president of the Eagan -
based company, happened into receiverships, a form of
bankruptcy in which a company can avoid liquidation by
reorganizing with the help of a court-appointed trustee. He had
begun his company as a property management firm, but when
asked whether he could manage a property that had been
foreclosed on by a financial institution, Larson said yes and,
thus, receiverships were added to his company specialties.
"When we first got into receiverships, we were doing five to
six businesses — each taking six to nine months. That was a
good year," says Larson. "Now we're doing 50 receiverships a
year, each taking one to three years. And we're looking at five
to six receivership or forbearance opportunities each week."
Obviously, the economic downturn has been good for one
division of JBL Companies. "Everything's cyclical," says Larson.
Back in 1995, JBL's real estate and operational businesses
were surging. "The last few years, that's not been true," he says,
explaining the ups and downs of his business. Instead, while
those divisions have contracted, JBL's Special Assets division,
which handles receiverships, has been growing since 2007.
As a receiver, Larson serves as a court-appointed administrative
officer who manages properties that have been foreclosed on
by financial institutions. JBL provides monthly reports that include
profit -and -loss statements, cash receipts and disbursements,
statements of taxes, aging reports of liabilities and receivables,
operational reports, insurance claims and more. A neutral
party, Larson is responsible to the court and not to the lender.
car dealerships are among the entities most hard pressed these
days to find lenders.
Yet, even if a business is turned down for a loan initially, that's
not the end of the road, says LaBate, explaining that she often
counsels business owners to refine their plans or she may put
them in touch with accountants or attorneys.
"Just because we can't do a loan today doesn't mean we can't
do it in the future," Swanstrom agrees. "We can help business
owners with their plans. We can put them in touch with SCORE,
a small-business counseling service. There are lots of ways
to move forward, and we're passionate about working with
small businesses." ■
2010 Fourth Quarter
"We ensure properties are maintained in the best possible
condition, both physically and fiscally," says Larson, adding
that the conscientious management of these properties keeps
them operating at the highest possible level, which makes
them desirable to potential buyers.
Similarly, JBL Special Assets
also conducts forbearance
agreements. Unlike a
receivership, in this situation
"a borrower feels like they
haven't yet lost the battle."
JBL is responsible to the
lender and is brought
on to run the business.
Sometimes JBL employees
run a company; sometimes
JBL selects a core group
from within the struggling
company to take charge; and
other times JBL hires a new team to run the business.
Additionally, banks often hire JBL to serve as its OREO, or
Other Real Estate Owned, department; this requires JBL to
determine how best to deal with such assets as a piece of
raw land, a commercial property or a cabin.
"There are a lot of Johnny-come-latelies to this business," says
Larson, explaining that new businesses want to ride the reces-
sion's wave of receiverships and forbearance agreements. But
because it's an arena that demands experience and knowledge,
JBL continues to be among the area's most sought-after firms.
Larson notes that the receivership uptick won't continue —
and he knows that for many businesses, that's a good thing.
"At JBL, we look to maximize opportunities and watch the
barometers of banks and our clientele. We ask, 'What's your
economic climate?' so we understand what's next." ■
EBN is printed on paper which contains a minimum of 10% post consumer fiber. Eagan Business NEWS 3
City of Evan
3830 Pilot Knob Road • Eagan, MN 55122
Editor Karin B. Miller, Working Words, Inc.
Designer Brent Kastler, Kastler Art & Design
Send comments and story ideas to
EBN@cityofeagan.com.
Briefly
• BUSINESS: On Nov. 18, Lockheed Martin announced plans to
close its Eagan facility by 2013. The defense contractor says it
hopes to transfer about 650 of its 1,000 employees "most
engineers" to its Owego, N.Y., San Diego, Calif., and Manassas, Va.,
locations. Look for more coverage of this news in future issues of
EBN.... Six member businesses of the Dakota County Regional
Chamber of Commerce received Survive and Thrive Business
Awards in November. Judged on a variety of criteria, including
challenges met and overcome, opportunities gained and strategies
created to thrive into the future, the 2010 winning organizations
included Cerasis, a freight -consulting company; CF Industries, a
global leader in fertilizer manufacturing and distribution; Eagan 4th
of July Funfest, a volunteer -driven nonprofit; Fairview Ridges
Clinic - Eagan; Medi -Car Auto Repair, a full-service automotive
maintenance and repair business; and Velocity Telephone - Eagan,
a telephone, data and internet provider.... Archetype Signmakers
of Eagan fabricated environmentally sustainable signs for Macalester
College's new Markim Hall, helping the college earn LEED Platinum
status.... Eagan's Biotel is again the target of a merger with
Pennsylvania -based CardioNet.... Eagan -based K2 Logistics has
teamed up with Lou Nanne, famed Minnesota hockey coach, to market
his autobiography, A Passion to Win.
• GOVERNMENT: A ribbon -cutting ceremony celebrated the opening
of the new 600,000 -square -foot USPS St. Paul Processing &
Distribution Center in Eagan in late October. More than 900
employees process more than 6 million letters and 500,000
4 Eagan Business NEWS
Standard
U.S. Postage
PAID
St. Paul, MN
Permit #7732
Celebrating at the Dakota County Regional Chamber of Commerce's
2010 Survive and Thrive Awards are (front row, from left) Meghan
McDaniel, Koch Companies Public Sector and 2010-11 Dakota
County Regional Chamber of Commerce; Ruthe Batulis, Dakota
County Regional Chamber of Commerce; Debi McConnell, Medi -Car
Auto Repair; Michael Ferber, Eagan's 4th of July Funfest; Dawn
Baddeley, Fairview Clinic - Eagan; Katie Holley -Carlson, Fairview Clinic
- Eagan; Steve Ludvigson, Cerasis, Inc.; Jim Hickle, Velocity
Telephone, Inc.; and (back row, from left) Brent Cory, Eagan
Convention and Visitors Bureau; Scott Dohmen, CF Industries, Inc.;
and Lou Pappas, Fairview Clinic - Eagan.
magazines, newspapers and large envelopes a day.... Eagan's City
Council approved a planned development amendment to allow auto
repair and service at Discount Tire at 3575 Pilot Knob Road....
During 2010, more than 70 businesses and organizations, plus
numerous individuals, donated 345,874 pounds of food for the
Eagan Sesquicentennial Food Drive. To join them, visit
www.eaganl50.com.... The Minnesota Appeals Court heard both
sides of a case regarding the Cedar Grove Redevelopment District
on Oct. 5; a decision is expected in 90 days. ■