Financing the Future of your Business
Every small business’s path to growth is a little different, but most of them will require some form of additional financing. That is where a banking partner comes in. Choice Bank provided Minneapolis-based engineering services company EXB Solutions with the financing they needed to advance to the next stage of growth.
Founded in 2000, EXB Solutions serves the aerospace, defense, and medical technology industries with systems engineering and embedded software development for safety and mission-critical projects. EXB Solutions’ Chief Financial Officer Dave Sommerness had an existing relationship with Choice, as his prior employer was a Choice Bank customer. Dave’s friend Chris Schwartzbauer joined EXB Solutions as a consultant in 2012 with the goal to increase sales.
EXB Solutions was holding its own, but it wasn’t actively growing. Chris was soon offered the position of CEO by the company’s owners, who were nearing retirement, and took this as an opportunity to fully realize his vision for the company’s growth. Chris decided to pursue full ownership of EXB solutions, but first he would need the financing to do so. That’s where Choice Bank comes in.
In 2018, Choice Bank provided EXB Solutions with a 7(a) Loan through the Small Business Administration to finance a partner equity buy-out and Chris obtained full control of the company. The 7(a) Loan Program is the SBA’s most common loan program. These loans are commonly used for short- and long-term working capital, refinancing current business debt, and assisting in the acquisition, operation, or expansion of an existing business.
“It’s the perfect product for business acquisition because there’s not a lot of collateral on an acquisition,” said Bryan Frandrup, Choice Bank Commercial Loan Officer. “You’re buying blue sky. You’re buying goodwill. It’s tough for banks to get comfortable on a conventional financing side with all that blue sky, the SBA is what helps us get us there.”
The SBA guarantees 75% of 7(a) loans, giving banks an increased incentive and security to lend. The SBA has also temporarily increased 7a loan guarantees from 75% to 90% until September 30, 2021. This initiative minimizes the bank’s risk substantially and makes new lending opportunities even more enticing. What this means for the borrower is an increased chance of their loan being approved. The SBA has also temporarily waived guarantee fees and is providing up to three months of payment relief for borrowers. Learn more about these temporary incentives here.
Since Chris began leading EXB Solutions as CEO and Owner in 2018, the company has grown by 74.82%.
“The important thing for us is that businesses have the working capital that they need to grow,” Bryan said. “If they don’t have enough working capital it stunts their growth.”
“The important thing for us is that businesses have the working capital that they need to grow,” Bryan said. “If they don’t have enough working capital it stunts their growth.”
In 2020, Choice Bank also assisted EXB in acquiring a PPP loan during the COVID-19 pandemic. This PPP loan allowed EXB Solutions to keep many of their engineers on staff and even pursue new business.
“It is gratifying to see continued progress in our business, and particularly our team,” Chris told the SBA. “In the last five years, we have achieved lofty milestone targets. These results have been delivered by a great team. The shutdowns due to COVID-19 had a significant impact on our business, but the great engineers, office staff, and client-facing teams have rallied and re-established our position so that we are in great shape coming into 2021. We are now actively hiring to support our future growth plans in 2021 and beyond.” Read the full success story here.
“We want to support the borrowers that will do what they need to do to survive and grow.”
Bryan worked closely with EXB Solutions through the entire 7(a) and PPP financing processes and continues to provide financial guidance to the business. “We believed in Chris and Dave and their ability to lead this company and be successful,” Bryan said. “We want to support the borrowers that will do what they need to do to survive and grow.”
If you are currently considering new growth opportunities for your business, now may be a perfect time. Right now, interest rates are low, making it an especially good time for businesses to borrow.
For more information or to find a loan expert near you, click here.