Hartford Business Journal

20 Hartford Business Journal • March 6, 2017 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL CT is a good place to live; let's keep it that way I t's no secret that Connecticut residents can be a pessimistic bunch. Many of us complain when it's too hot during the dog days of summer, and then bark even louder when winter wind chills dip temperatures into the single digits. One of our favorite pastimes is complaining about the state's business climate and fiscal condition. Taxes are too high, we've got too much debt and our lawmakers spend too much, are common reframes. The constant wave of budget deficits and a fiscal outlook that remains tenuous at best, have left many residents and businesses questioning Connecticut's future prospects. Sometimes, however, we get so cynical that we overlook our state's assets and top qualities. The media is guilty of this too at times, focusing on the negative — but also very real — threats to our state's future, while forgetting to remind residents, busi- nesses and the rest of the country and world what makes Connecticut such a great place to live and work. Our opinion pages have been critical of the state's poor fiscal management and condition over the years. We won't apologize for that because we believe Connecticut's fiscal crisis threatens job growth in the state, which is ultimately responsible for rais- ing standards of living. But it's also good now and then to reflect on the positive aspects that set the state apart, because it can serve as a reminder to our political, business and other leaders what they must safeguard and protect. The U.S. News & World Report gave us that reminder last week, when it released a report that ranked Connecticut among the top states in the country. The "Best States" report gave Connecticut an overall ranking of 12, including high marks for its quality education and health care, low crime rates and economic opportunity. Indeed, quality of life in Connecticut remains a top selling point for many who live and work here. We've got world-class educational institutions, one of the most educated workforces in the nation, a vibrant arts and culture scene, among other assets. Gov. Dannel P. Malloy, like any politician would, hailed the report's findings, exclaim- ing that "Connecticut is a great place to put down roots, raise a family, and grow a business." He was particularly proud that the state was recognized for embracing and grooming gender equality, quality education and a talented workforce. All of those things are true, of course, but they can be fleeting as well. The report, for example, did highlight our economy as a weakness, ranking us 38th in the country, which is a concern. Weak economic growth poses a threat to all that is good about this state, because it means there is less money to invest in education, public safety and infrastructure. For example, Malloy's two-year budget proposal, which aims to close billion-dollar budget deficits for each of the next two fiscal years, cuts municipal and education fund- ing too many cities and towns. That could mean fewer teachers in schools or higher property taxes for residents. Meantime, eight of the 10 states that ranked highest in U.S. News & World's "Best States" report had economies ranked in the top 20. Malloy himself admits that "our government must always be working to make [the state] even better." Of course, our political leaders don't always share the same philosophy of what "better" means. The main priorities must be to enact policies that promote job growth and make it easier and more affordable to live and operate a business in the state. We understand satisfying those needs isn't easy during a time of fiscal crisis. But more important than dwelling on what makes Connecticut a "best state" is enacting policies and an economic climate that safeguard and promote that position. n HARTFORDBUSINESS.COM POLL Is East Windsor the best location for a third CT casino? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Should Tesla be allowed to sell its cars directly to CT consumers? 55.7% Yes 44.3% No EXPERTS CORNER Debunking myths about business-growth financing By Jeff L. Hubbard N ew product lines. A big office move. New market opportunities. These are bold steps that require expanding pro- duction or distribution capacity, renovating or buying a facility, upgrading equipment or even buying another business. They also require money, which grow- ing businesses may not have — yet. When it comes to financing options for growing businesses, there are a lot of myths and miscon- ceptions. Here are three common ones: 1. Small and mid- sized business- es are limited to an off-the-shelf approach to their banking needs. 2. The most flexible, customized financ- ing solutions are available only to the largest companies. 3. Small Business Administration (SBA) loans are available only to the smallest companies. The reality is, there are many more ways to finance growth than most business own- ers realize. The following are some common myths about financing a business in growth mode — along with the facts that tell a different, cash-flow friendly story. My business has outgrown SBA loans The SBA finances businesses with a net worth below $15 million and an average net income below $5 million. Considering this range and the fact that SBA loans can go up to $12 million, today's SBA product is fully equipped to provide financing to a wide range of businesses, from startups to large middle- market companies. Even after a business receives their first SBA loan, there is still additional sup- port the SBA can provide. For example, there are scenarios where a business will receive multiple rounds of SBA financing over time. Currently, the SBA has robust loan programs for working capital, real estate, balance sheet refinances, export - ing, equipment, business acquisitions and partner buyouts. My company's assets cannot help me secure financing Many business owners assume that only larger businesses can use their company's assets as collateral for a loan or line of credit. But collateral doesn't have to mean a build- ing. While many loans are backed by hard assets, such as real estate or production equipment, those are not the only forms of collateral for bank financing. So, what are the other options? Often, growing businesses assume receiv- ables are simply future revenues — but from a bank's perspective, receivables are just as valuable as inventory, equipment, owned facilities and other tangible assets. You may qualify for a loan or line of credit that includes your receivables as collateral. Receivables- backed financing is an affordable way to increase working capital and fuel growth, and the amount of credit available can grow right along with your business. Or, your busi- ness may qualify for a line of credit based on a combination of your receivables, inventory and equipment, tailored for your company's distinct growth plan. I do not have time, money or patience to automate my accounts payable process Many business owners believe maintain- ing manual processes for handling invoices and payments is easier and less costly. This is especially true for business leaders fac- ing never-ending demands on their time and resources, who fear that the process to automate accounts payable will inevitably detract from more important, revenue-pro- ducing activities. In actuality, failing to automate accounts payable is costly. Manually processing an invoice from receipt to payment can cost as much as $20, versus $4 for automated pro- cessing in high-volume businesses where there are thousands of invoices. "Greening" the business is good for the environment but not for company finances Many businesses are building environ- mental sustainabil- ity into their operations, whether to address company values, meet customer demands or satisfy government regulations. It's often assumed that these "green" initiatives will not necessarily translate into direct financial benefits for the company. Here are the "green" facts: Tapping into federal, state or local incentives and financ- ing options can actually improve cash flow and allow the company to fund more credit for growth. In Connecticut, small businesses can save energy and money through Energize Con- necticut's Small Business Energy Advantage program, where technicians conduct a no- cost energy audit of your business and pro- pose custom recommendations for energy improvements. If you decide to upgrade your equipment to more energy-efficient models, there are financial incentives for up to 50 per- cent of the cost, as well as zero-interest and low-cost financing options payable on your monthly electric bill, so you only have one monthly payment. Businesses should also take a look at Connecticut Green Bank's C-PACE program, which provides long-term financing for qual- ifying clean-energy upgrades through plac- ing a voluntary assessment on their property tax bill. n Jeff Hubbard is president of KeyBank's Connecticut and Western Massachu- setts Market. Jeff L. Hubbard ▶ ▶ The reality is, there are many more ways to finance growth than most business owners realize.

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