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Banks have programs to help small businesses through transitions

M&T Bank

M&T Bank offers a variety of programs to small businesses to help with the transitions they face throughout the life cycle of the business. (File photo)

When a small business seeks advice from M&T Bank on selling, merging, or another kind of transition, it might discover that Eleni Monios has just the knack.

“I have been personally a part of this from a very young age,” said the bank’s market manager for greater Baltimore, Delaware and the eastern shore. Her parents in Baltimore acquired a small business, grew it, purchased real estate and sold it at retirement age, she said. Monios has built on that “valuable experience” and all the parallel experiences during her career, “to be able to sit down comfortably for very significant conversations with our business owners.”

Throughout the company, M&T bankers meet “numerous times” to advise small business clients with up to $15 million in sales, typically at their businesses, she said.

“Do they need more capital, new sales people, (are they) looking to buy a competitor, grow their business and what kind of strategy do we need to optimize that transition? These things are coming up all the time,” said Monios. M&T Bank is a Small Business Administration leader in the region for new companies, providing more SBA loans than other banks, she added.

Mike Flynn at Eagle Bank of Bethesda has cultivated his knack for advising small business transitions over the past several decades. Flynn said that in general community banks are better at services for small businesses than large banks like BB&T, SunTrust or Bank of America, though they too have commercial lending departments.

“Here, it is not just dollars and cents. We keep a very personal and professional relationship with our clients. It is really understanding their business and being able then to give them good advice,” he said.

Eagle is a commercially oriented community bank, separated by that business model from other community banks, which are more “retail” oriented to individual customers with savings, checking, credit cards, etc., said Flynn. “Our customers are small or medium size, privately owned businesses.”

He said that most of the time Eagle knows beforehand when a business owner/customer is going to be making a transition. “One of the questions we ask as we meet with each of them periodically to review things is what is your exit strategy.”

Waldorf-based Community Bank of the Chesapeake also provides similar advice to small businesses transitioning, but often in a more rural and suburban region, said James M. Burke, the bank’s president. “If you are a local business trying to finance, we have a vested interest in their community.

“The role that community banks play in their markets to support continued economic growth is a vital one and one that can’t be duplicated by the larger banks.” said Burke. “When I make a loan to somebody, I see them in Safeway or I will see them in church. That kind of relationship can’t be duplicated.”

If funds are needed in a transition, a business can turn to such conventional banks, an angel investor, or an investment bank, such as SC&H Group of Sparks, said SC&H Capital Director Christopher Helmrath. “Each (choice) brings on certain financial consequences that the owner may not have considered,” he said.

SC&H is one of the investment banks used by entrepreneur Ken Malone, principal of Early Charm Ventures, LLC, also in Sparks, who has launched a series of small startup businesses. Three to four years before one of his startups is ready to sell, Malone looks for potential buyers within the industry of a particular startup. His startups are typically in health care or high tech, where he has placed growing companies associated with the University of Maryland, Johns Hopkins University, the U.S. Naval Research Laboratory and other tech pockets.

Other “serial entrepreneurs operate in a similar fashion, such as those who have spun out the many bioscience startups along the I-270 Bio Corridor through Montgomery County. When funds are needed such entrepreneurs often turn to an investment bank, said Malone, rather than a conventional bank. An investment bank would pool all of the investors together as an aggregator to make the transition, he said.

According to Helmrath, “as you go along the compendium of the life of a company, what we tend to do is to ask, ‘if you do this, will it achieve the objective.’ For example, there are three ways a company can get capital, from a conventional bank, an angel investor or an investment company. Each brings on certain financial consequences that the owner may not have considered (by him or herself).”

He said he has helped current companies, which are already SC&H clients, think of what their startup should be before it is launched. It is a natural extension of the relationship, he said.

I do not provide capital, as a conventional bank may do. But when it comes time to help a small business bring in capital to help a company transition, we represent companies that do that. We find the money, just as a real estate agent will find a new house from the marketplace matching the buyer’s needs, he said. “Our advice along the way is ‘help me understand what I don’t know, or I should be thinking about, so that when I get there I haven’t made a mistake.’”

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