Quiet desperation
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SignLab from CADlink


Quiet desperation

Financing your sign business, one persons view from the bottom.

By Alan Dorman

While I applaud the sign industry push towards UL compliance I was somewhat taken aback late last year when one of my designs came under fire for just such regulations. Normally a sign company will come to me for a flashing solution for their latest creation and the first question they ask, if applicable, is if my products are UL compliant. I provide them with what I call my "UL book" which takes every component on my products and shows the UL certification for each component. This has always sufficed to appease the UL inspectors.

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  • The project that came under fire was designed, installed, tested and put on the truck, ready to be delivered to the sign for install. Apparently the UL inspector started asking questions and my "UL book" was presented to the UL inspector. This time the book was not enough to satisfy this particular inspector. My customer was told that even though all of the components used on my products were UL compliant the "system", or assembly of the components into the sign was not. The project was disassembled and the sign was set to "steady burn" just to get it lit up.

    It was time to get my "system" requirements certified by UL. I worked with UL and we came up with a way to design the enclosure for my components and how to test them for certification. I received the letter from UL outlining these tests and a request for "money up front" to do the testing. Not having a large "war chest" for these kind of out-of-pocket expenses I decided to get a business loan to get the certification paid for. And this is where the story actually begins.

    January of 2000:
    My first trip was to the local SCORE office to find out how to do a business plan. These people were very helpful and informative. I learned how to write a cover letter that explained how much money I needed. This letter described myself, my company, my products and my 18 year history in the sign business. SCORE helped me to understand how to describe myself to the banking industry in terms that they could understand. Within a month we had a business plan worked out and printed.

    February of 2000:
    SCORE next directed me to call the SBA to find out what avenues of finance were available to my small business. The SBA recommended that I set up a meeting with one of their local representatives through the college to make sure that my business plan met their requirements. The person they directed me to was an expert with the financial aspects of a business plan. She was very cooperative and showed me how to create realistic spread sheets that showed my company potential with and without the funds I needed. While SCORE was an expert at the wording of the business plan their financial's proved to be lacking. Due to the SBA representatives busy schedule, she also taught and did seminars across the country, it took another two months to get this process completed.

    April of 2000:
    The SBA representative then gave me a list of banks in my area that were known to favor SBA loans and had given out more loans than other banks. We went to the top of the list and she contacted the first bank, introducing me and my company. I set up an appointment with the banker and found myself sitting across the desk from a very attentive loan officer. She asked me various questions and I was able to guide her through my business plan showing where every question was answered and with solid financial data to back it up.

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    Two weeks later I had my first denial. I was astounded, the SBA person was amazed. Not being one to take "no" for an answer I went back to this same loan officer and asked her what I was doing wrong, how could I could improve my chances with the next banker. She said that my business plan was excellent but my products were hard to understand. I was told that my products were "too unique to rate". I offered to take her outside, to stand on the street corner and gaze up at one of my "unique" products being used in the sign across the street. That didn't help matters, I was asked to leave.

    July of 2000:
    Having applied at all of the banks on the SBA's "A" list we started on the "B" list. Banker number five, a small bank advertising itself as a business bank, gave me my next shocker. I was told by this banker that I should stop trying to obtain the funds I needed from ANY bank. I was told that each time I had applied and been turned down a small "tick" had been added to my credit record. Now when my records were pulled up on the computer it showed my company as a "four time loser" and I would be automatically refused the loan. I called the owner of the bank and he personally took a look at my situation. Two weeks later I was told that the uniqueness of my products was what convinced the bank not to pursue the matter further. He suggested that I go to the sign industry, the people that I had serviced for so many years, to see if I could get a loan for my needs.

    August of 2000:
    Back to working with the SBA we came up with a letter to give to some of my bigger customers. I offered my product at cost plus 10% and free software for the period of the three year loan pay back. Six letters later I had received only one reply. The other five companies did not even acknowledge that they had received a letter. One company had me going for over two weeks, asking me to fax and re-fax the letter saying they had never got it. Then would not return my calls. The one response I did get was a brief "no thank you" and "good luck". I spent the final weeks of August logging onto the internet contacting Venture Capital outlets. Writing letters, explaining my needs. I found and emailed 52 VC organizations and received two responses, both negative, I had asked for too little money for them to take an interest.

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    September of 2000:
    The SBA representative has stopped returning my calls. They have no actual power over the banking community and even though they guarantee 80% of the loan the bank must first approve the loan before their services come into play. My customers are bugging me about when I will get my UL compliance because they have jobs coming up. I spend my days sitting in a class room full of small business wannabees plying the state for start up money for their new business. I am forced to listen to countless lectures from successful business people in the community telling me how the "niche" they discovered is what made them successful. How their "unique" product or service set them apart. One lady bragged about how she got a loan to color chicken eggs, one with the state motto on it, that she presented to the governor. The "How to Write a Business Plan" classes are a real drag because I tend to wave my plan up in the air when the teacher makes a point, disrupting the class.

    I guess the state makes these future business owners go through this procedure to ensure that their money is spent wisely. Unfortunately the state also sets a limit to how much money is loaned to each applicant and their maximum amount lent will only be half of what my company needs to get UL compliance. The state, after lending the money, will require weekly financial meetings to ensure that the money has been spent according to the business plan. This is a great program for new businesses and I recommend that if you are starting a new venture you look into this "Micro Loan" program in your area. The loan process with the state takes three months minimum, and I am told that the personality of the applicant and their character are an important factor in getting the loan. I think that my social skills are probably too "unique" to rate to have given these people any kind of positive impression about my character. Eight months of frustration will do that to a person. I'll know in about two months.

    October of 2000 (the future):
    I will be standing on the street corner near the business center of town with a sign that reads "Will Work For A Business Loan" with a stack of introductory letters to hand out to the curious. Unless, of course, you know of some rich "Sugar Daddy" that wants to make some money on a short term loan.

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