Next Street redefines lending for US businesses

Next Street Financial LLC is a merchant bank. Anyone in business or banking should take a long hard professional look at this operation, and see how it works, why it works, and what can be achieved. This is a working model of what might be.

The problem for US business is capital. The big lenders are geared to big loans to big business. That’s left a lot of perfectly good businesses out in the cold. Next Street has exposed a huge potential market. The big lenders have lost contact with the middle and lower ends of the business market. The problem with that situation is that those parts of the market are a huge demographic of US business. The result has been the lack of business capital which has stymied US growth. The bank says it's "redefining the rules of the game" and it is, irrefutably, doing just that. Next Street is a New Economy style lender and advisory service which is going where the giants won’t or can't. There’s a particularly bizarre element in this situation, where good businesses are being starved of finance and help mainly because of the ossified operational limitations of lenders. These businesses represent a potentially huge cash flow to lenders. More importantly, these are the businesses which really are good lending prospects, solid, motivated, needing capital, and reliable. They need to grow and develop, and need help with their financial models and existing loan situations to combat the dismal market conditions and get back on track. Next Street is getting rave reviews from its clients, not exactly the normal reaction from borrowers. The services even include assistance with hiring, and some very obvious customization to client needs, another thing usually missing from the cookie cutter lending approach the world admires so much. Next Street is showing results where other financiers seem to be sending wreaths. Next Street works with a very diverse client range, from real estate to furniture and toner cartridge companies and removalists. That indicates a very high level of flexibility and talent in service provision. All industries have their own idiosyncrasies, neuroses, and typical business and financial issues. Any business analyst will tell you that you don’t just walk in and start repairs. It requires expertise and definite business savvy to even know where to begin with some businesses. Some whole sectors are currently comatose, or just twitching, and it really does require talent to get things moving in this environment. Next Street is also redefining the banking business model. The monolithic financiers did what monoliths do, during the crash. They tilted or fell over. It’s a matter of debate whether business models which were originally conceived in the 1950s and tweaked a bit since are realistic in the emerging economy. They’re slow, vulnerable, and if they’re too big to fail, they’re also looking too big to adapt, let alone show the sort of agility and breadth required in the modern market, which is filling up with micro multi-businesses (businesses with multiple areas of trade across different areas) and middle sized businesses which have nothing in common with the old style business models. Goldman Sachs has finally thrown $500 million of life jackets into the small business market, but that’s a small drop in a very large bucket, bearing in mind the sort of capital required to really restart the US economy. The New York Times describes this as “charity”, although “soup kitchen” would also have worked. Next Street is justifiably proud of its achievements, and has a media page with a succession of pieces from major business magazines. Next Street isn’t doing “micro lending”, but that may yet be a workable option, considering the bank’s track record so far. Ironically, but perhaps appropriately, Next Street is doing what made American business famous: Innovating. That’s been missing for a long time. That may well be what will ultimately produce a real recovery.