Hartford Business Journal

HARTFORDBUSINESS.COM | NOVEMBER 11, 2024 11 and we welcome their input. We look forward to seeing how they can be additive to the lending ecosystem." Not everyone was onboard last year in approving the $15 million in BIDCO grants. Jeffrey Beckham, Gov. Ned Lamont's budget director, in written testimony opposed the funding because he said it would spend capital funds on a "non-capital" program, and was "dupli- cative of services already provided by existing programs." John Carusone, president of the Bank Analysis Center in Hartford, noted that 18.7 million Americans, or 14.1% of U.S. households, are "underbanked," despite the existence of more than 5,000 banking institutions nationally. That indicates "there's plenty of room for another participant to try and address the needs" of underserved populations, he said. David P. Raccio, senior vice presi- dent of BDC Capital, a privately owned economic development lender focused on New England, said he believes Capital Business Lenders will help grow lending capacity for underserved populations. Raccio said state taxpayers can be assured the public investment in the company will produce results, given the wealth of experience of its founders and staff. "I definitely think they would be comple- mentary because they have always been that way," Raccio said. "Julio and Bernie are used to connecting resources. They are going to continue to put those pieces of the puzzle together." With new state incentive, second business industrial development corp. launches in New Haven By Michael Puffer mpuffer@hartfordbusiness.com B usiness and industrial development corpo- rations (BIDCOs) are small private lenders focused on lending to disadvantaged commu- nities, and they've been a rarity in Connecticut. Capital Business Lenders, which launched in Hartford in 2022, was the state's only BIDCO until last December, when Better Local Capital was incorporated with a New Haven address. It got its state lending license in September and, like its Hartford cousin, aims to tap into a $15 million grant pool created by the state legislature in 2023 to support the formation of BIDCOs. Better Local Capital is led by CEO Mark Hayles, who previously worked as a business advisor with the Connecticut Small Business Development Center; and Chief Operating Officer Calvin Vinal, who led community development lender Capital for Change for 13 years. Hayles said Better Local will start out providing loans for operating capital, generally for periods of three months to a year, at annualized interest rates of 6% to 12%. That's a far cry, he said, from the 25% interest some small business owners pay for short- term capital through credit cards. "Short-term capital is really the key," Vinal said. "There is tremendous demand in the marketplace from histori- cally underserved and disadvantaged populations." Better Local won't turn away any potential borrowers, but will focus its energy on minority and underserved populations, particularly business owners who would otherwise struggle to gain credit from traditional lenders. Hayles said Better Local will assess character as well as FICO scores when judging creditworthiness. "And so, we're trying to look at ways in which we can help these businesses navigate better pathways to capital and, ultimately, back into the traditional lending market with the mainstream banks," Hayles said. Under state law, a BIDCO must have a net worth of at least $2.5 million to be licensed. Hayles and Vinal said they've received $2.8 million in low-interest loans from banks, and are close to closing on another $1 million. State lawmakers created the $15 million BIDCO grant pool in an effort to boost small business lending in underserved communities. The law allows for grants of up to $5 million per institution. Hayles said Better Local will pursue some of that funding, with a goal of raising $20 million in capital and awarding 77 loans in its first year; it hopes to reach 360 loans by year three. The group currently employs four people and expects to grow to a staff of 10 within three years, he said. Mark Hayles Calvin Vinal Catherine Marx SS pringfield Spring Corporation is a manufacturer of preci- sion-engineered springs, wire forms, and stampings. We make small components," explains Norman Rodriques, President and CFI at Springfield Spring & Stamp- ing. "The glove box in your car has a spring in it. When you push a button on an elevator, it works because there is a spring in it. One of our largest applications now is medical components. Springs are among those things you never see, but they're all around us." Investing in People "Springfield Spring & Stamping's success starts with Norm, his part- ner, Tina, and their management team. They invest in new technolo- gy, product development, and also their employees. That combination makes them unique," states David Ference, First Vice President, Com- mercial Banking at PeoplesBank. One of the strategies behind the company's success is what we call How Open Book Management Leads to Increased Profits P E O P L E S B A N K B U S I N E S S S U C C E S S S E R I E S open book management. In short, Springfield Spring & Stamping man- agement shares its financials with its employees so they understand the drivers of the business and feel a part of the process. They under- stand how their day to day helps the business thrive. Meeting Regularly "Our employees understand the mechanics of how the company makes a profit," Mr. Rodriques con- tinues. "Increasing business literacy has really engaged our employees. We explain the company's financial position, from forecasting to the balance sheet. Every month we sit, turn off the phones, lock the doors, and have a one-hour, all-hands meeting where we all evaluate the company's financials. Sharing is car- ing. The employees want to know: Why do we come here every day? What impact do we have on the industries we serve?" "You can feel it when you visit," says Mr. Ference. "This strategy of open book management has created a strong culture of transparency, trust, collaboration, and accountabil- ity at Springfield Spring & Stamping. It empowers employees to take own- ership of the company's success." Mr. Rodriques states: "I've lived through, I think, four recessions. Going through those recessions was not easy. Each time, the catalyst behind our recovery was all of us hunkering down and understanding that, if we wanted to overcome the recession, we have to really look at things within our company. We all did it together. And because we're open book managed, our employees understand the good, bad, and ugly." Building a True Team Open book management has also been key to the company's success, Mr. Rodriques notes: "Throughout the different challenges, I can say emphatically that the reason that we overcame them was because our management and employees are teammates — true teammates — and the foundation for that is transparency." "You can feel it when you visit. This strategy of open book management has created a strong culture of transparency, trust, collaboration, and accountability at Springfield Spring & Stamping." David Ference, First Vice President, Commercial Banking at PeoplesBank " Business Success Tips: Open Book Management Increase financial literacy before sharing financial data. Determine what you are willing to share. 2 1 Learn More Member FDIC 877.888.1388 | bankatpeoples.com/PBbusiness

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