Banks Profit From Mentoring Small Businesses in Need of a Jump Start

Fashion designer Alicia Estrada has gone from selling homemade dresses at rockabilly concerts and car shows to running a booming clothing line.After running Stop Staring for 14 years, she wants to expand at a time when the economy is making it hard for entrepreneurs to succeed and banks aren't lending like they used to.She's now getting help from an unlikely source: Wall Street.UBS, Switzerland's biggest bank, put her in a program that matches small-business owners with financial advisors and business experts. Estrada is one of 10 Los Angeles entrepreneurs whom the bank is connecting with mentors and helping to finance their expansion.
A recent report by the National Federation of Independent Business, a nonprofit lobbying group, said its small business optimism index fell for May on the negative economic outlook. Only 7 percent of small businesses said now is a good time to expand, according to the report."If (the banks) take people with good ideas that don't have the business experience to get them off the ground, then that's helpful," said Christopher Thornberg of Beacon Economics. "The complexity of a small-business operation grows quickly. It's good to have a hand up."
The UBS program is a relief for Estrada, 40, whose 26 full-time employees can't keep up with demand. "I felt like I'd been walking on tippy toes this whole time," she said.The program's participants are not startups but established entrepreneurs who have gotten as big as they can, given their limited business acumen."We're not backing business plans," said UBS Group Americas Chief Executive Bob McCann. "We're backing people who have had some success."Estrada has made it this far without so much as a written elevator pitch, let alone a business plan. Still, her 1940s- and 50s-style dresses sell faster than she can order them, she said.
She recently gave UBS financial advisors Seth Radow and Glen Titan a tour of the facilities — the showroom where celebrities and buyers check out the top products, the warehouse filled with 30,000 dresses, the old photo studio that now serves as fabric storage.Radow and Titan — with help from HBO producer Anne Thomopoulos — have six months to help Estrada turn Stop Staring into an exploding business.The UBS effort, called Elevating Entrepreneurs, is the second version of the bank's small-business advisory program that launched last year. The bank is also making $10 million in loans available for small businesses in L.A.Other major financial institutions have designed targeted programs for financing and mentoring small businesses.