Innovation Spotlight: Small Business Owners of America
Small businesses get big help for short-term financing challenges.
Sometimes a good opportunity needs a little money to back it up, as Robert Grimmett discovered recently.
The founder and CEO of the Robert Mason Co. was approached by Columbus-based retailer Express Inc., which wanted to sell the company's products through its online store. Grimmett's company makes what he describes as office products and accessories-journals and leather bags, for example-that give a "nod to nostalgia with a modern appeal."
So Express placed the largest order ever for Robert Mason, Grimmett says. There was only one problem: The company didn't have the merchandise to fill the order and needed to ramp up production. After unsuccessfully visiting local banks, Grimmett turned to James Moore, who got him the cash he needed in about a week and helped Robert Mason avert potential disaster.
"There is a very good chance we would not be here without it," Grimmett says.
Moore is the founder and CEO of Small Business Owners of America, a Columbus-based company whose primary focus is providing short-term financing to established businesses that need quick cash-as Robert Mason did-to buy new equipment or to solve an emergency.
The business' initial aim with its 2011 beginning was providing incorporation services and crafting business plans for clients that they could then take to banks or investors for financing. Taking it a step further, SBOOA began identifying alternative funding sources and became a broker between the client and financier. Moore says from there it was a natural progression to start financing the funding himself, an aspect of the business he capitalized with personal funds.
"As I realized they wanted the consulting to get to the endpoint and I figured I could help them get there, that was my ah-ha moment," says Moore, whose background includes working as a broker for a private equity company.
The company had completed nearly 120 deals as of January with a 10-percent default rate that Moore calls "very low."
Moore says there are a couple of components that differentiate the way his company operates and what clients embrace: A 10-month limit for the financing duration and the two days it typically takes to receive financing after applying. Interest rates start at 12 percent, but the quick turnaround is the value component.
"So if a business has a large purchase order or project that requires some capital up front, they may miss out on that opportunity if they have to wait for an approval from a bank," he says.
SBOOA financing is revenue based, meaning applicants must demonstrate that the business is healthy and show a historically consistent record of getting paid on time by their customers. Clients make fixed and regular payments, which are delivered electronically to SBOOA, chipping away at the balance.
Zachary Traxler and his custom printing shop fit the latter criteria. Faced with a huge order and tight timeline, the CEO tapped into SBOOA for cash that would let the 25-employee company get a new printing press and increase its output. Traxler says it was unsecured financing, and that gave him some concern.
"You really need to weigh the finances," he says. "If our client didn't pay us on time, that would have cost us a lot of money. This was an extremely easy process."
Financing for Moore's first two client companies totaled $55,000, and he says it was nerve-wracking waking up every morning to ensure their payments made their way to his bank account. His largest single client so far has been the Wham-O toy company based in California, which has received two rounds of financing totaling $700,000. A goodly number of clients are referred to SBOOA by brokers.
Moore is the business' sole employee but the company's early success has led SBOOA to working with other types of lending companies, including equipment and asset-based lenders. In 2015, SBOOA lent $5.2 million and its early 2016 estimate is between $12 million-$15 million; 2015 revenue was $9 million. Further, it also has attracted investors to the business, most of whom Moore says are area physicians.
The success of SBOOA enabled Moore last June to launch CBus Equities LLC, a traditional equity financing company.
Craig Lovelace is a freelance writer.
Small Business Owners of America
65 E. Gay St., Suite 201, Columbus 43215
Founder, CEO and sole proprietor: James Moore (above)
Business: Providing short-term financing to businesses.
Year founded: 2011
2015 revenue: $9 million