After starting Dennison Electric in 1997 with $36,000 of his personal savings, Steven Dennison, with new contracts, new prospects and phenomenal growth, was soon prompted to seek additional funding. However, despite his track record of success, potential for continued growth and a list of prospective projects, the electrical contractor was rejected by both Citibank and Chase Bank (now JP Morgan Chase).
"I tried to establish my credit before I went into business. I wanted to be in business for myself for a long time. I started with residential work, then I started getting some small commercial work, some stores, car washes, restaurants and a small factory," Dennison says. "When I became a certified union electrical contractor, I needed resources to expand and take on bigger jobs. [The banks] originally declined me. It had nothing to do with not having good credit. They just didn't work with small contractors."
Dennison contacted the Regional Alliance for Small Contractors, which helped him secure a $50,000 line of credit from Fleet Bank for new equipment and to cover payroll. The Bank of New York and Chase subsequently kicked in additional support that included business and personal checking and credit cards.
"I had to show that my taxes were good, credit scores were good, my company status was good and I had to explain why I needed the money. I had to show three years'-worth of financial statements. Once I was able to prove my credit was good, that my company was doing a certain type of work and that I was a part of a good organization like the Regional Alliance, I was approved," Dennison says. Obtaining financing is the hardest part of being in business, he adds. "A company's future depends upon whether banks will support the business. The banks allow us to be in the playing field," he says.
At 47, Dennison, a recent widower and father of four, two of whom are in college, is seeing his business take off again. He has jobs installing fire alarms in schools, a small hospital and at the Alvin Ailey Dance Theater in Manhattan, and he's bidding on a phase-one project to install lights during the renovation of the Apollo Theater in Harlem and on projects at two public schools in Queens and in the Bronx. He also hopes to win contracts for work on the Queens Psychiatric Center. To accommodate the new business, he will need to expand from his current nine employees and two trucks and find a larger warehouse and office. He also will need money to cover the bonding and liability insurance required of certified union contractors and is returning to Fleet for a $1 million line of credit. Given his company's record with the bank, plus his association with the Regional Alliance and prospects of new contracts, "there is a strong possibility" he will get the loan, he says.
Small minority contractors often do not win bids on major public projects because they lack the mandatory bond ($100,000 on a $1 million contract), required liability insurance (15 percent of the gross earnings of employees) and cash flow to withstand a delay in payment, which can run from 30 to 60 days. Certified union contractors in New York also must pay workers on a weekly basis and provide dental and hospitalization coverage. "A small contractor can't float and maintain payroll and equipment for the length of time. There have been some chances for small contractors like myself, but to get into the level of the mainstream contractors is still an unfair process. Even though there are opportunities, the standards are still very high," Dennison says.
Still, Dennison Electric is growing. The company expects to have 35 to 50 employees within the next two to three years and it has been invited to bid on Battery Park, Fulton Street and Lower Manhattan Development Corp. projects. "Given the right opportunity, I would definitely move forward," Dennison says.
By James C. Lawson