How Anchor Bank helped Chris Heit go from manufacturing company employee to owner and CEO
When Chris Heit, a longtime employee of manufacturing company Precision Mold, set out to purchase the company from original owner Fred Capra in 2014, he didn’t know quite where to start. It seemed the natural first step would be to talk to his personal bank, which he had been banking with for 30 years. However, after an initial conversation with the bank, he was surprised to fi nd that it was uneager to help him. Next, he went to larger banks. However, rigid financing structures and the requirement of a larger down payment stood in his way. Eventually, he found another local bank that could help him, but the process was moving too slow. The whole experience was becoming disheartening, to say the least.
“Then I was introduced to Kalen Schwartz from Anchor Bank,” Heit explains. “Kalen was more interested in what I wanted to do than any of the other banks. I felt like he took a special interest in what I was doing and the business itself.”
A Creative Solution
Drawing from his banking experience, Schwartz — the assistant vice president of business banking with Anchor Bank — was able to quickly assess the financials of the situation and come up with a creative fi nancing solution, which included a loan through the Small Business Administration (SBA).
But more than that, Schwartz and Anchor Bank provided Heit with support and information throughout the entire acquisition process, ensuring a smooth transition to his new role as owner and CEO of Precision Mold. Where other banks might be more of an order-taker, Anchor Bank has the expertise to sit down with its clients and see what option is the best fit, rather than trying to fit clients into a box that might not make sense for their situation.
According to Schwartz, a common misconception about acquisition deals is that the buyer needs to come up with enough cash to cover the entire purchase price of the company.
“Often, we can lend up to 75 percent of the purchase price,” Schwartz explains. “There are options out there, and we utilize the Small Business Administration program to get over hurdles people think banks may have.”
A Little Help from the Small Business Administration
The SBA participates in several loan programs designed for business owners who may need help qualifying for a traditional bank loan. SBA loan applications are structured to meet SBA requirements, so that the loan is eligible for an SBA guarantee. With the help of the SBA loan program, Schwartz put together a financing plan that worked for both the buyer and the seller.
In Heit’s case, the basic 7(a) loan program was the best choice. The program gives 7(a) loans to eligible borrowers for starting, acquiring, and expanding a small business. It’s the most basic and the most used within SBA’s business loan programs, and borrowers must apply through a participating lender institution like Anchor Bank.
“Although I was aware of the SBA loan before, I didn’t know all the ins and outs,” Heit says. “I didn’t know how the SBA loan could work in combination with owner financing — and Kalen was able to lay all of that out because he’s so familiar with [SBA loans].”
Anchor Bank is an SBA preferred institution, allowing the bank to approve SBA deals in house. Since SBA loans often have complex rules and regulations, this expertise allows Anchor Bank to walk clients through their unique situation, offer different options and find a solution quickly.
A Smooth Transition
In February 2015, Heit officially acquired Precision Mold. After working at Precision Mold for 16 years, the acquisition was a natural progression. Because of his tenure there, he was knowledgeable about many different areas of the business.
“I built new tools the entire time I was here, and I helped with quoting, office work, and customer relations when I needed to,” he explains. “So, when it came time for the previous owner to think about retiring, it was a natural progression that I stepped up.”
Because of his strong relationship with the previous owner, his vast knowledge of the business, and Schwartz’s ability to fi nd a financing option that worked for him, Heit is continuing to grow the Precision Mold customer base and provide the high quality of service and attention it always has.
“There’s not a cookie cutter solution for everything,” Schwartz says. “There are some people that don’t even know where to start, or think they need to borrow money from family or a take out a personal loan. But we try to help people realize there are options on the business side, too.”
Precision Mold Services
HEADQUARTERS: Blaine, MN
LEADERSHIP: Chris Heit, Owner & CEO
PHONE: (763) 792-8993