From left, speakers Richard Amsterdam, Thomas E. Dolan, Keith Lawlor, and Nicholas Terzulli, with Printing Industries Alliance – Long Island program organizers Greg Demetriou, Richard Schielke, and Bill Dirzulaitis
Smart printers never leave money on the table. The trick, though, is knowing where all the tables are. That’s no easy task when it comes to locating sources of public and private funding for business development, especially in the high-cost environment of Long Island.
The Long Island branch of Printing Industries Alliance made the search a little easier for members who attended its recent winter meeting on the theme of “Where’s the Money?” and how to go about obtaining it. As the guest speakers, a banker and three representatives of local government agencies said that financial assistance is available to printers willing to ask for it and able to work with providers that want to help.
The Babylon Industrial Development Agency, for example, lends a hand by doing whatever it can to make it easier for businesses to relocate to or grow within the town’s boundaries. Resources include fast-track bureaucratic approvals, tax abatements and extensions, and tax-exempt bonds. Thomas E. Dolan, a senior project manager for the agency, urged printers in Babylon or those thinking of setting up shop there to contact his office whenever they plan capital improvements or other kinds of expansion.
According to Keith Lawlor, a vice president for TD Bank, “there’s free money out there” for business development because of declining interest rates on commercial rates on commercial loans. Banks have to compensate by stepping up their lending volume. That’s good news for would-be borrowers, said Lawlor, but it also means closer scrutiny by the banks of the qualifications of loan applicants—even customers who have been doing business with their banks for decades.
Bank financing usually is the key to one company’s acquiring another, and on Long Island, said Lawlor, the pace of mergers and acquisitions has been brisk. The type of M&A lending that banks prefer is the arrangement in which the seller partially finances the transaction by holding a note of repayment, leaving the bank to provide the rest of the funding to the buyer. He said that selling printers should be realistic about what they can expect in terms of multiple of EBITDA, a calculation that determines the selling price. (EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Desirable companies have high EBITDA multiples; less attractive companies, smaller ones.)
Lawlor urged printers to get their financials in order now, even if they are not yet at the point of applying for a loan. “It’s all about what’s on paper,” he said, explaining that applicants must be prepared to document their ability to repay what they borrow. The most challenging loans to finance, he said, are those for working capital in which the collateral is the borrower’s accounts receivable—a volatile asset that can be hard for banks to base decisions on.
The U.S. Small Business Administration (SBA) doesn’t make loans for working capital, but it does provide lending for fixed-asset acquisition through The 504 Company—a not-for-profit corporation it established in 1981 to administer the SBA 504 Loan Program in New York, New Jersey, and Pennsylvania. Coordinating it for the three states is the New York Business Development Corporation (NYBDC), represented at the PIA-LI meeting by Richard Amsterdam, its vice president.
Through the 504 program, he said, NYBDC can provide 40% percent of the fixed-rate loan amount in partnership with a bank that finances most of the remainder. All business sectors except the adult and gaming industries are eligible for loans that can range from $50,000 to $5 million.
The idea is to enable businesses to acquire fixed assets while retaining the working capital they need for growth and job creation. Amsterdam said the program recently worked well for a printer who obtained $4.3 million in financing to buy and install a new offset press using the invoice value of the machine as collateral. Processing and approval of 504 program loans, he said, takes only about 30 days on SBA’s end—the same as the bank.
High taxes on businesses, acknowledged Nicholas Terzulli, director of business development for the Nassau County Industrial Development Agency, represent the “biggest barrier to growth and entry in Nassau County—hands down.” He said that while his agency can’t necessarily lower the rates that businesses pay, it can help to protect owners against increases while making sure that they are taking advantage of all of the incentive programs available to them.
These include real estate, sales, and use tax exemptions; mortgage recording tax abatements; and financing through tax-exempt and taxable bonds. The agency’s Local Enterprise Assistance and Development Service (LEADS) program provides direct financial assistance and other kinds of help to the county’s small and mid-sized businesses.
Nassau’s IDA coordinates its efforts with those of state agencies and local utilities, connecting businesses with these entities to break logjams and move projects forward. On Long Island, said Terzulli, “everybody loves to work together on economic development” regardless of the turf or the politics involved.
Among Nassau IDA’s recent successes, he said, is the decision by automotive retailing software developer DealerTrack to build a $150 million campus in Lake Success following 18 months of negotiations with the county to craft a package of incentives. On a smaller scale, the IDA worked with a technology company that wanted to move from the South Bronx to a safer haven on Long Island. Taking part in the conversation that sealed the deal, Terzulli said, was the chief of police of Plainview, where the company now is located.
