Just Your Size

In 2000, Ronald Reed launched his home health-care equipment company, Benchmark Mobility Inc., with just $1,800. But his capital needs accelerated so quickly that within a few years, his personal savings, credit cards and home-equity funds were no longer up to the task. "I was sitting on a couple hundred thousand dollars of business I couldn't do anything with because I had outgrown my personal credit," says Reed, 36.

But securing growth capital wouldn't be easy. Reed worked his way through the Yellow Pages, but was turned down by every large bank he contacted. Their concern was universal: his lack of assets to secure the loan. "For us to have $3 million in sales, we might only have $50,000 of inventory at any given time," Reed reveals. "Now that's a huge gap, and most banks aren't comfortable [granting] a quarter-million-dollar credit line without having a building and a large amount of inventory to substantiate that. Even though the company is making a great deal of money and cash flow is pretty well-diversified through different payers, the banks don't see us as their ideal client."