assets, including inventory, equipment, and accounts receivable. Other

lenders, he says, will look at intangibles such as patents,

copyrights,

contracts and intellectual property. Banks may not be open to making

loans to businesses without a track record, but other lenders may

take on the risk, he says. "Our loans are bridge loans," Kompa

says of the financing asset-based lenders like his company typically

provide. Generally, the term is 18 months to three years, just enough

to get a company over a difficult period. Rates, he says, are above

those charged by banks, because the loans are riskier and also because

they are more labor intensive. "Each company has an account

executive

who works with them daily, monitoring collateral," he says.

company

looks carefully at management. Experience is important, and so is

a firm grasp of reality. Anyone can make a mistake, Kompa says, but

it is important to recognize where the mistakes are. "We’ll

discuss

their plan," he says of the process of evaluating a company.

"If

they don’t have a plan, that’s our answer."

If there is a plan in place, Kompa says there is no extensive number

crunching, but rather "we listen to their assumptions for their

numbers. In that process, we get a very good idea if these people

have their feet on the ground and understand their problems."

reasons that companies go under, Kompa says. There often comes a time

when companies realize they should have gotten financial help six

months ago or a year ago, he says. When a company is losing market

share, sales are declining, and it is getting difficult to cover

expenses,

management needs to act. Companies need to seek help before they start

to lose money at a rate where bleeding is too rapid to stop, he says.

When it is no longer possible to get financing to cover expenses,

when a company is so over-leveraged that it can’t bootstrap itself

up, it is probably too late to obtain additional financing.

in cutting costs. This is not easy to do, Kompa acknowledges,

particularly

when lay-offs are involved, but it is essential. "These people

will be the winners when the economy gets better," he says of

those who cut business expenses. And it’s not just personnel costs

that have to be examined. "A lot of things creep into the budget,

and you just carry them from year to year," Kompa says. That may

be fine when times are good, but when sales slow, he says, it’s

necessary

to look at every line item.

"That’s the way the cycle goes," Kompa says of periodic

slowdowns.

"If you don’t react, you’re a statistic."

Corrections or additions?

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