Financing rules for small business owners.

by OnDeck CFO Howard Katzenberg 

Howard Katzenberg knows a thing or two about how to grow, and lend to, a small business. A veteran of American Express’ small business division and former consultant for Swift Financial Corporation, a small business lending firm, he has seen the small business lending landscape from all sides, and has had a front row seat addressing the challenges commonly faced by small business owners. As the CFO of OnDeck, he also has taken a small business from infancy to IPO.

Howard took the time to answer our questions about growing a business, how to manage lending in the modern era, and the most important financial tasks for any small business owner.  

1.     You’ve been involved with OnDeck since it was a much smaller business. Have your roles and responsibilities changed to meet the company’s growth?

I inherited the finance function at OnDeck in 2009. At the time, there was little infrastructure, and only two people on the team. I took it upon myself to build our financial model, oversee financial reporting and planning, establish a treasury function, and execute all debt fundraising transactions.

I take great pride in what we have accomplished since then, but during most of my tenure as a finance leader I functioned as a “doer,” focused on the day-to-day.  Despite my personal attachment to these activities, this was not a scalable approach for a successful CFO.

When I became CFO, my number one priority became creating a robust finance team.

Over the last two years, we have grown OnDeck’s finance team from four to 28 people, including four vice presidents.

2.     What is your strategy for growing your financial team effectively? How do you know whom to hire?

The biggest lesson I learned is that hiring the right people is very important when growing your business. The right hires help you create leverage in both yourself and your business.

I recruited individuals who had functional expertise, rather than industry experience, to bring fresh perspectives and improve existing processes.

The impact is clear – by effectively delegating, my team is incredibly motivated and performing at a very high level. I can now focus on strategic issues such as long-term planning and employee development confidently, knowing the day-to-day tasks are in good hands. And our more senior team members have leveraged their past experiences to better mentor and manage junior staff members.

3.     Is being a small business owner today the same as it was 10 years ago? What are the biggest changes?

The entire ecosystem that small businesses operate within has completely changed – in the past, you advertised with the Yellow Pages. Now, you have to be up-to-date on Google, Yelp, Twitter, Facebook, and the rest of social media as a whole – and the need to understand each is especially pronounced when it comes to financing.

Despite the wealth of electronic data now available, banks simply aren’t lending smaller dollar amounts to small businesses anymore. The number of sub-$100,000 commercial loans has steadily declined since 2007, and financing generally continues to be a challenge for small businesses. That’s why the small business owner of today needs to be more finance-savvy than ever.

4.     How is the business financing landscape changing? What are the positives and negatives of this new world?

Lending is being completely disrupted by online platforms, which are introducing a whole new world of financing options for business owners. Rather than simply relying on their bank, business owners now have options like loan matching sites, peer-to-peer lending, crowdfunding, and online small business loans.

From a business owner’s standpoint, the good news is that you now have a greater ability to take advantage of growth opportunities.

Something to be aware of, however, is that with all of these new financing options, it’s crucial to educate yourself on what the different forms are, and which one is right for your business. That’s why organizations like SCORE are so impactful. They help small businesses understand the right options for their needs.

For our part at OnDeck, we recently launched a website called that speaks directly to this need, and helps simplify small business financing for all types of business owners by avoiding the jargon and presenting the options in easy-to-understand terms.

5.     What’s the most important task you can do to maintain the financial strength of your business? Where should you be focusing your time?

There are two main areas where I’d tell any business owner to focus their time:

1)     You – or someone on your team – must deeply understand your finances in order to succeed. So if running the day-to-day and dealing with customers plays more to your strengths, you should consider hiring a bookkeeper and accountant to make sure you stay on top of everything.

2)     Even if you do hire someone, you must understand your cash flow – that’s what it’s all about. Make sure you know what drives your customer’s purchase decisions and how you can improve.

6.     How can Main Street businesses use technology to manage their finances? Which tools are a worthy use of money and time?

Modern accounting software is incredibly helpful for small business owners to better manage both their finances and their time. Offerings like Quickbooks or Xero can simplify both your daily transactions, as well as help you create reports and statements to increase your decision-making effectiveness.

7.     What’s the biggest thing you’ve learned about financing a business during your time at OnDeck?

Your ability to attract capital is a direct function of the visibility you have into your business performance. Whether you’re getting ready to apply at a major bank or an online lender, understanding what your investment opportunities are and what your returns are from those investments is key.

The single best thing you can do is spend some time getting comfortable with what your numbers are telling you, before you even begin the process of applying for financing.


About the Author

Howard Katzenberg, OnDeck CFO  

OnDeck offers business loans and business lines of credit to small businesses across the United States. OnDeck analyzes businesses differently than traditional lenders, which means that they can make more loans than traditional lenders, and they can fund businesses within hours or days – not weeks or months.  To date, OnDeck has delivered over $1 billion to small businesses nationwide.

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