Regulation leads to new loan options


Bill Garden was seeking additional capital for his expanding business and discovered that getting loans for expansion was harder than he thought it would be.

Co-owner of Peak Med, a family health care business, Garden wanted to expand to more locations throughout the state.

He knocked on a lot of doors starting in April 2016, Garden said, before finding the right solution seven months later. He uncovered options outside traditional banks and credit unions.

“There are so many options now to acquire funding,” he said. “There is something for everybody, and chances are somebody out there is the right fit for your business. That’s what changed in the last 20 years. It used to be so traditional, but not anymore.”

Garden was part of a three-person panel that discussed  innovative business financing at the most recent El Paso Club meeting of the Middle Market Entrepreneurs, a group of business owners and senior executives who contribute to the success of small to medium-size companies by engaging in an exchange of relevant ideas. The other panel members were Peter Carter, executive director banking group of UBS Wealth Management Americas, who flew in from New York City, and Jason Aubrey, principal at PlattPointe Capital, a financial consulting firm in Denver.

“The ghost at the table is the regulator,” Aubrey said. “That’s what created alternative financing and made a company like ours possible. We’re primarily an asset-based lender; if they have machinery or receivables, we’ll look at how we can get the deal done.”

PlattPointe Capital principal Creighton Bildstein, who grew up in Colorado Springs and lives in Denver, agreed with his partner.

“The Dodd-Frank Act created a lot of regulations for big and small banks and created opportunity for special debt funds to provide funding for businesses in need,” Bildstein said. “We are the intermediary that matches the borrower with the lender.”

If a company is low on cash but has revenue, Aubrey said, there are ways to get funding. Carter, who deals with higher-end clients, said, “Cash flow is the mother’s milk of your company, and good advisers are essential.”


Garden didn’t expect to have trouble finding capital to open a new center in north Colorado Springs and another in Littleton. His challenge was picking the proper option.

“We had three strengths,” Garden said. “We were self-funded at that point, so we were committed; the health care system is broken, so there is a need; and we’re small, but we had cash flow. Our challenge was we had no scale. We had two clinics and one mobile unit and had been in business 18 months, so it was hard to get with a bank.”

More strict federal regulations have made that a common theme for many small businesses, so rather than work with a local bank they are forced to seek alternative financing.

“My side is growing,” Aubrey said. “The regulatory market has put banks at a standstill.”

Aubrey doesn’t think that’s going to change soon.

“I see 8-10 more years of this market,” he said.

Carter is less bearish, but couldn’t predict when regulations might loosen. He noted that some banks are losing key personnel, which can complicate borrowing.

“A lot of seasoned bankers are retiring,” he said. “[Lending is] an art, not a science.”

It’s also an educational experience, especially for the business owner.

“This is probably my fifth time to get capital, and every time I learn something different,” Garden said.

The three important items for a business owner to know before they start seeking funding, Garden said, are:

• Know your ask.

• Know your need.

• Know what you’re willing to give up.

“Even when you get it done, it’s human nature that you’ll worry about it for the next six months,” Garden said.


Garden settled on a boutique private equity company called ASI Capital in Colorado Springs.

“You got the right deal,” Carter said. “You stayed local, and you can go have coffee with them.”

ASI Capital led the $5.5 million fundraising round. The deal was done in August, when PeakMed CEO Jon Hernandez said the company had about 4,500 memberships in Colorado — which is its home base — and 80 percent of those were in the Springs.

“About 75 percent of those are employers,” Hernandez said. “We’ve probably had a 420-percent growth rate.”

That funding bought two new vehicles for home service, helped hire staff and pay for new technology to allow secure 24/7 communication between doctors and members through calls, email, text and video chat.

Garden said he wasted some time before settling on a lender. That’s why Aubrey prefers to get down to brass tacks quickly.

“We want to have a hard conversation on why the bank said no to a business owner,” he said. “What is the problem? Did they quadruple sales and are growing too fast and need more capital? We can help in those situations.”

Or maybe Aubrey can’t solve the problem, either.

“For us, a fast ‘no’ is important, and we won’t go down rabbit holes when it’s not an option,” he said.

And maybe the rates Aubrey can get don’t appeal to a borrower.

“Traditionally, we’re at double-digit interest rates, but our rates are coming down,” Aubrey said. “People are used to us now, and our market is more robust.”

Keeping the appointments and paperwork moving can be important, Carter said.

“We want to play big and feel small,” Carter said.

There is a void of lenders between the $5 million and $10 million range, he said. Small Business Administration loans are capped at $5 million.

“The middle market starts at $10 million, so there is a void there, and you’ve got to be creative and look hard,” Carter said.

That got Garden’s attention.

“We’re right in the middle of that hole,” he said. “We’re just over three years, and that can be a problem for banks, and we’re doubling revenue every year; we’re at $4 million now.”

PeakMed will seek another round of funding, in the $15 million to $20 million range, in the first quarter of 2018, Garden said. He said ASI Capital might be willing to fund part of that need.

“We had others that we talked to earlier that want to be involved in our next round,” Garden said. “Some of them were too big for us the first time.”

Aubrey said businesses should be persistent when looking for loans.

“There’s a lot of capital out there,” he said. “It’s done differently than in the past, but lending is not an algorithm in a spreadsheet. Things can get done. Business owners just need to kick over every rock and shake every tree.”