Taking to the Airwaves to Fight Limited Access to Capital
With more than 30 years of experience in the entertainment field, David Stern knows the ins and outs of the event industry. The technician and engineer toured with top national and international acts such as Meatloaf, Bon Jovi, Van Halen, and the Scorpions, developing an expertise in the design and maintenance of electronic systems.
In the 1990s, Stern worked as an audiovisual manager at high-profile resorts, including The Breakers Palm Beach and The Turnberry in South Florida. He was later vice president of national sales for an audiovisual company before starting Precise Corporate Staging in 2000.
After launching his business, Stern became all too familiar with the frustration of being adversely impacted by banking regulations and with difficulty securing access to much-needed capital.
Stern took out two Small Business Administration-backed loans for a total of $4 million to buy large staging equipment that the company rents for events. In 2009, Stern’s bank called in the loan even though he says he had never missed a payment and was never late. “We figured we were fine. We had a $4 million note and had $12 million in inventory as equity against it,” he explains. “The bank gave us no answer as to why. Banks tell us it’s because of the regulators. If the bank makes a loan and the regulators don’t like it, they make the bank write it off its balance sheet, and the bank takes a direct hit.”
With the economic panic gripping the country and regulators squeezing banks, Stern says that securing a new loan took more than a year. “Five different banks turned us down. They either didn’t like the business we’re in, which is capital intensive, or they didn’t like the fact that there’s risk involved. But every loan—and every business—has risks.”
Finally, a Chase Bank representative contacted Stern to find out why his company wasn’t banking with Chase. After a long process, Stern says that he secured a new loan through Chase. “We’ve spent the last two years trying to dig out of the hole we were put in,” he says, noting that last year the company grew by 35%.
Stern and his wife and business partner, Marla, took their story to the media, appearing on FOX Business News to talk about their struggles to secure a loan. “We figured we had a good story to tell about how we survived the regulators and a lot of sleepless nights,” he says.
But the couple’s concerns about overzealous financial regulators and tightened credit have not completely subsided. Says Stern, “The big thing we’re concerned with is the Dodd-Frank law It’s scary that Congress can create a shell and fill out the details later,” referencing the fact that many of the rules implementing the law have not been developed or finalized by regulators.
Beyond overregulation, Stern, who counts Fortune 500 companies among his customers, says that anti-corporate sentiment in Washington impacts his business and other small firms like it. He adds, “When you have the administration beating up CEOs every night and criticizing corporate meetings, that hurts our business directly.”