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Divvying Up Debt
Entrepreneur, Sept, 2001 by C.J. Prince
Most entrepreneurs prefer the personalized service of neighborhood community banks over the deep pockets of regional behemoths. Over the past three years, in fact, more than 840,000 small businesses have switched their primary business deposits to smaller providers, according to a study by Calabasas, California-based Informa Research Services Inc. Community banks haven't always been able to satisfy entrepreneurs' capital needs, however, because of their legal lending limits. Now more of them are turning to syndicated lending for help.
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Usually used by larger banks, syndicated lending allows bankers' banks--or regional institutions that service their member community banks--to purchase the bulk of a business's loan and then parcel out the rest to smaller banks. This allows community banks to offer loans well above their lending caps. Durand, Illinois based Durand State Bank, for example, could participate in loans well above its lending cap--about $900,000--by doing syndicated loans with the Independent Bankers' Bank in Springfield. "[Our limit was] not going to accommodate many small-to medium-sized entrepreneurs," says the bank's president and CEO, David Nosbisch. "If we [use] the bankers' banks, which can split up the loan so it can be made, everybody wins."
C.J. Prince
WRITER
This month, our "Dollar Signs" columnist, C.J. Prince, writes about a pension reform bill and how it affects entrepreneurs (page 41). "What surprised me was the disparity between what politicians say they're doing to help small businesses and what entrepreneurs actually think of those efforts." Prince has been executive editor at Chief Executive magazine since 1996.
COPYRIGHT 2001 Entrepreneur Media, Inc.
COPYRIGHT 2008 Gale, Cengage Learning
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