National Business Incubation Association; Your source for knowledge and networks in business incubation

Positive return on investment: building relationships at the bank

by Meredith Erlewine

February 1999

When a local banker told Sherrye Hutcherson, executive director of the Omaha Small Business Network (OSBN) in Omaha, Neb., that many of her clients simply weren't prepared enough to secure a loan, she didn't go back to the incubator without a deal. Hutcherson asked the banker to teach her clients how to prepare to get the loans and went back to OSBN's incubator with a new technical assistance program and a loaned bank executive (see "Incubator-bank collaborations" below).

Hutcherson and other savvy incubator managers have found that local banks are coming through for incubators and start-up businesses in ways no one expected a decade ago. Nationwide, banks have created venture funds, teamed up to create start-up-specific loan pools, loaned out executives' time and expertise, donated office space and made loans to previously unbankable start-ups. How did Hutcherson and her associates attract these invaluable allies? They knew they could offer the bank excellent business opportunities and marketed their clients and programs as such.

"A working relationship between a business incubator and the financing community is a natural fit," says Mark Barbash, executive director of the Columbus Countywide Development Corporation (CCDC) in Columbus, Ohio. At CCDC, Barbash and the staff of the private nonprofit provide financing to small businesses, partnering with area lenders and the federal and state governments. "Banks and other small business lenders are looking for financing opportunities for growing businesses," Barbash says.

The incubator-bank relationship is one that every incubator manager should nurture in a professional and calculated way. Barbash has some insightful do's and don'ts regarding three of the most important aspects of incubator-bank relations: getting bankers involved in your economic development system, getting clients' deals funded and getting bankers to contribute funds to your program.

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Keywords: accounting/financial management -- client, funding sources/fundraising -- incubator, networking, partnerships – organizational/corporate, strategic partnerships

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