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Building a Lending Relationship that Lasts

Finding the right financial partner to work with over the long haul can present challenges as unnerving as picking the right spouse. In life and business, the promise and excitement that often marks the early stages of a relationship can overshadow flaws and shortcomings that foretell mismatched values, failed expectations and irreconcilable differences.

For staffing companies that hope to consistently pursue growth and opportunity unencumbered by payroll funding limitations, cultivating a strong long-term lending relationship has never been more vital. The U.S. Bureau of Labor Statistics predicts that more jobs will be created in the personal supply services industry (which includes staffing) than in any other, and that it will be the fifth fast-growing industry through 2010. What’s more, two of the top three fastest-growing industries – computer and data processing, and health services – are major clients of the staffing expansion.

Lending Relationship

As America recovers from the 2001 recession, the foreseeable future looks very promising for staffing services. With the next economic expansion reserving a lead role for staffing companies poised for growth, there’s a lot to be gained in new clients and expanded business – and a lot to be lost for those whose funding source puts on the brakes when they’re ready to go forward. To build a successful, lasting lending relationship that meets your changing needs over time, look for these three key qualities that differentiate “relationship-minded lenders” from mere funding sources.

Personal Contact. Times change, business challenges change -- your contact at your funding source shouldn’t. Finding a different loan officer handling your account each time you call puts does not let you get past the “get acquainted” mode. Often, when lenders make critical decisions about a loan, it is based on past performance and kept promises. You don’t want to have to prove yourself to a new lender every time you need flexibility. What you really need is a financial professional who already knows you and your business, has been there for you in the past, and is ready to help you move quickly to achieve your objectives. Having one account officer you can turn to saves you the “ramp-up” time of repeatedly explaining who you are, what your staffing service does, and why you need the funding and support that you’re requesting.

Flexible Services. One-size-fits-all financing is a thing of the past. Responsive and flexible financial support is a “must-have” competitive edge for today’s staffing companies. Your financial partner should be someone who takes the time to get to know you, earns your trust, and anticipates the services you need to make the right moves at the right time. As a staffing company grows, their financing needs change. Will your lender be able to give greater flexibility, change rate structures and do the things necessary to adjust to the needs of your company as it grows?

Look for a partner who’s passionate about getting results for your business through innovative ideas and customized funding. A growing number of finance companies (also called specialty funding companies) have funding programs designed specifically for high-volume staffing services that thrive on a ready source of capital to expand business and take in extra profits. Whether it’s disproportionate credit lines, greater leverage, flexible financial covenants, or more relaxed financial ratios, specialty lenders often offer custom designed funding that allows staffing companies to set their own level of financing to sustain a corresponding rate of growth. Find a lender that has multiple lending options that will fit your needs over a long term transition and get a commitment that those options are available to you.

Staffing Industry Expertise. With their rapid growth potential and lack of tangible assets, staffing firms that request expandable funds from an unenlightened lender can go from welcomed borrower to credit risk almost overnight. During the latest economic downturn, we learned that decreasing revenues and profits instill fear in some lenders. The only thing that generates equal fear is rapid growth what banks sometimes refer to as “uncontrolled growth.” Rather than trying to change the practices of lenders who serve many industries and have only a passing knowledge of staffing, the best chance of finding a financial partner that will work in your best interests is to hook up with one that funds the staffing industry exclusively.

Beacon Services, Inc., a Michigan-based firm specializing in staffing, computer training and human resource consulting, has been through 20 years of lending relationships with banks and funding sources. Founded in 1981 by Judy Zacha, the firm’s president and current chairman of the American Staffing Association, Beacon has been a staffing industry model for managed growth. Starting out as an employment resource for West Michigan businesses, market demand led to the opening of offices in Grand Rapids in 1986, South Haven in 1992, Holland and Niles in 1994, and Kalamazoo in 1996.

In spite of being a highly successful local staffing company with close ties to the community and a diverse network of business resources, Ms. Zacha sometimes found lending relationships fundamentally disappointing.

“For a staffing services business, people are the only assets,” said Zacha. “When sales volume increases and payroll needs hit new peaks, many banks don’t seem to have the comfort level to offer the capital flexibility to keep pace with that growth.”

Since using Capital TempFunds to fund Beacon’s payroll, Zacha is enjoying the rewards of a relationship with a financial partner who lives and breathes the staffing industry.

“My loan officer does his homework and asks all the right questions about our company,” Zacha observed. “It makes doing business so much easier that he has a frame of reference for the staffing industry and how to overcome the specific obstacles we face in reaching that next level of success.” They were there for us when the economy was tough, and they are supporting us while our volume is enjoying a rebound.”

With so much at stake in such a competitive staffing services environment, finding a financial partner who can make and keep a commitment to support your ongoing growth and profitability is worth the effort. Show me a funding source that puts clients on a first-name basis, has a record of expanding and customizing financial services to meet evolving needs, and possesses an intimate, all-consuming knowledge of the staffing industry, and I’ll show you a financial partner who will be there whenever you need them.

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