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GYEDC Presents Ways to Improve Bottom Line

Jul. 10th, 2012
Mara Knaub

GYEDC presents ways to improve bottom line July 10, 2012 6:43 PM ShareThis| Print Story | E-Mail Story BY MARA KNAUB @YSMaraKnaub Businesses can still improve their bottom line even tough economic times — with a little help. That’s the message shared at the Greater Yuma Economic Development Corp. Quarterly Investor Luncheon on Tuesday. “Crisis brings opportunity,” according to Keith Watkins, senior vice president of business attraction at the Arizona Commerce Authority. Through the 2012 Business Retention and Expansion Survey, the GYEDC asked local businesses what holds them back from growing. The survey revealed a need for information on business incentives, workforce training funds, low-interest loans, research and development tax credits, employee tax credits and government contract procurement, said Doug Nicholls, GYEDC chairman. With the theme “What’s in It for You? Innovative Ways to Improve Your Bottom Line,” a variety of speakers shared such information with those in attendance. Watkins noted that the ACA, formerly the Arizona Department of Commerce, has been re-created as a streamlined organization with a focus on job creation. And not just any jobs, he pointed out. The organization’s key focus is on “quality” jobs. “We don’t want to be exempting jobs that are less than the median county wage,” Watkins said, adding that in Yuma County, that is an annual wage of $25,210. The incentives are different for rural areas. “We’re trying to give rural areas a leg up,” he said. Watkins noted that incentives are also available for existing business, not just startups. The most popular is the job training reimbursement grant, which ranges from $5,000 to $8,000 per employee. But, “there’s no free lunch here,” Watkins said, noting that companies first have to invest the money, then they’re reimbursed. He invited companies with job growth on the horizon to contact the ACA. The organization also works closely with the Yuma Private Industry Council (YPIC). Another available incentive is the low-interest loans program. “It’s like an 80/20 mortgage. We would be the 20, the secondary lender,” Watkins explained. “The one drive for this loan is jobs. We’re not bankers, that’s not what we do.” The program aims to help businesses “get over a hump” by giving them loans for working capital, inventory and/or improvements. It’s for small businesses with under 500 employees. However, this program can’t be used with another Small Business Administration loan. The Quality Jobs Tax Credit Program encourages business investment and job creation. In rural areas, the program provides tax credits to employers who create a minimum of five new “quality” jobs and make a minimum capital investment of $1 million. The program offers up to $9,000 of Arizona income or premium tax credits spread over a three-year period for each job. A qualified job is a new full-time and permanent position that pays 100 percent of the median county wage and the company offers to pay 65 percent of health insurance costs of the employee. Any company making the minimum capital investment in Arizona and creating the minimum new quality jobs can apply. “We’re very concerned and focused on rural areas,” Watkins said. He encouraged Yuma County business owners to get in touch with GYEDC “and let us know how to help you.” Terry Frydenlund, president and CEO of 1st Bank Yuma, wanted to put a rumor to rest. The rumor — “banks are not lending” — is a lie, he said. While some banks might not be lending, certainly some banks are, he said. “My advice is seek those banks that are lending.” Another false rumor is that “a bank is a bank is a bank.” He noted that banks have different business models, and business owners should look for a bank that best suits their needs. Another pointer he shared is that most banks are cash flow lenders, meaning they understand that the loan payment will be paid with the money the company makes. Frydenlund also offered these tips when approaching a bank for a loan. • Be prepared. Understand what you need and why you need it. Don’t ask, “How much can I borrow?” • Be honest. “If it’s good, it’s good. If it’s bad, it’s bad. We will find out if you lied. Just be honest. It’s a tough economy. Not every business is prospering in this economy.” • Have a plan. Understand how you will repay the loan. “Yuma is extremely lucky in that we have resources available,” including the Small Business Development Center (SBDC) and knowledgeable lawyers and accountants. • Be open-minded and willing to negotiate the terms of a loan. • Finally, pay your loan. “You don’t want me at your doorstep collecting.” In conclusion, Frydenlund suggested that businesses view their bank as a partner. In addition, he said, bankers should offer advice on how to get into position to get a loan. If not, a business owner might look for another bank. “Understand the bank’s business model. If they’re not interested, move on to the next deal,” he said. The final two speakers, Mercedes Mendivil of YPIC and James Vickers of the SBDC Procurement Technical Assistance Center, will be covered in an upcoming edition of the Yuma Sun. Mara Knaub can be reached at mknaub@yumasun.com or 539-6856. Find her on Facebook at Facebook.com/YSMaraKnaub or on Twitter at @YSMaraKnaub.

Mara Knaub
Staff Writer
The Sun
Jul. 10th, 2012