From the January 1997 issue of Entrepreneur

You're not the lone investor.

If you've socked much of your money away in real estate and mutual funds, you're not alone, according to the fourth annual Equitable Nest Egg Study.

The national telephone survey of 600 baby boomers with household incomes of at least $50,000 found that, excluding retirement plans and IRAs, 81 percent had invested in real estate, and 61 percent put money in stock mutual funds.

Real estate made up an average of 45 percent of respondents' investment portfolios; 20 percent was in stock mutual funds and 16 percent in cash accounts. The remaining assets were scattered among other investments such as individual stocks, bond mutual funds, annuities and cash value life insurance.

While boomers say they want to have more money for retirement ($1 million in 1996 vs. $928,000 in 1995), the study found they are saving less (an average of $5,000 a year in 1996 compared with $6,000 in 1995 and 1994).

Equitable Life vice president of communications Jane Mahoney speculates many of the boomers have diverted their savings to help pay for their children's college educations. This ties in directly with one of the study's findings: Boomers are more concerned about paying for their children's education than about investing for a financially independent retirement.

Capital Idea

Small banks that traditionally made loans to small businesses are increasingly being swallowed up in mergers, leaving entrepreneurs in the lurch. Fortunately, a rising number of commercial finance companies are filling the gap.

In 1995, commercial finance companies provided $141 billion in credit--up from $95.8 billion five years earlier. These companies are often more flexible than banks, considering factors other than numbers and assets when making a loan. "[Commercial finance companies] give opportunities to start-ups and other companies a lot of banks will not lend to," says Bruce H. Jones, deputy executive director of the Commercial Finance Association (CFA).

Princeton, New Jersey-based Business Alliance Capital Corp. (BACC), for instance, offers loans of $150,000 to $1.5 million to entrepreneurs in the manufacturing, distribution and service industries who cannot obtain capital from traditional sources. Companies emerging from or going into bankruptcy, as well as those that have erratic earnings, are also eligible to apply for loans through BACC.

When reviewing an application, BACC takes a company's merits and management's abilities into consideration. "We want to know it has staying power--that, even if there are losses, there is still a reason for the company to exist," says Jeffrey Goldrich, executive vice president of BACC.

Princeton Capital Finance Co. in Princeton Junction, New Jersey, specializes in loans to firms with contracts from government agencies and major corporations. Loans of $50,000 to $10 million are typically short-term (45 to 60 days), and credit decisions are weighted heavily by the financial strength of the entity awarding the contract.

For more information on commercial finance companies, contact the CFA at (212) 594-3490.

Financing Forecast

Loans to companies in light manufacturing, industrial distribution, transportation and communications technology are likely to increase, while loans to the retail sector will decline, says a new survey of commercial lenders nationwide.

The Lending Climate in America survey, conducted by Phoenix Management Services, a Chadds Ford, Pennsylvania-based turnaround management firm, found half the respondents expect to decrease lending to retailers. The survey polled 78 institutions, including banks, commercial finance companies and factors.

The survey found lenders are shying away from retail because of the high number of first-quarter bankruptcies and slower-than-anticipated sales. Lenders also expressed strong reservations about financing companies in the construction, retail distribution and start-up sectors.

In contrast, 69 percent of those responding were bullish on light manufacturing because of perceived creditworthiness. Lenders were also planning to increase their marketing efforts to companies in industrial distribution (63 percent), heavy manufacturing (38 percent), communications technology (28 percent), and transportation (24 percent).

Contact Sources

Business Alliance Capital Corp., 300 Alexander Park, Princeton, NJ 08543, (800) 246-1089, (609) 514-1140;

Commercial Finance Association, 225 W. 34th St., #1815, New York, NY 10122, (212) 594-3490;

The Equitable Life, 787 Seventh Ave., New York, NY 10019, (212) 554-1234;

Phoenix Management Services, 110 Chadds Ford Commons, Chadds Ford, PA 19317, (610) 358-4700;

Princeton Capital Finance Co., 38 Washington Rd., Princeton Junction, NJ 08550, (800) 762-2511.