Heavy equipment including a bulldozer and excavator sitting in a field
Heavy equipment including a bulldozer and excavator sitting in a field

Small and Mighty: Kraner Building Excavating

building on a healthy cashflow

Overview

Mitch Kraner, founder and owner of Kraner Building Excavating, wanted to grow his business but was reluctant to take out large loans. Thanks to Business Specialists at First Financial, he learned to strategically leverage a line of credit. By balancing both cash and loans to make equipment purchases, his small six-person team completes mighty projects.

The problem

When the average person hears the term “small business,” they might picture a local diner, or custom designs being sold from a home studio. They likely don’t picture a fleet of heavy equipment large enough to tackle building a brand-new water utility station. But that’s the reality for Kraner Building Excavating. Founded in 1988 by Mitch Kraner, his business is a one-stop-shop for both the excavation of buildings and sites as well as the construction of new buildings.

“I prefer not to take out big loans,” Kraner admits, saying that he tries to make all business purchases using what he lightheartedly refers to as “The Bank of Mitch.”

Of course, he needed loans to start the business and invest in new equipment. He wanted a financial partner he could trust to help him find the right balance between loans, outright purchases, and other business banking solutions. He found that with First Financial Bank.

Banking with First Financial

The relationship has been decades in the making. Kraner opened his first bank account when he was sixteen, and soon after opened his first business account with the same institution — an institution later acquired by First Financial Bank. As his business has grown, so have his banking needs. He works closely with his Business Specialist.

She gets that I'm a go-getter. I don't want to call up and say that I need something transferred in two days; when I call up, it has to happen today.

These days, Kraner Building Excavating has become the go-to contractor for local utilities. They are currently leading a comprehensive replacement of an aging pump house, from the underground irrigation to the construction of the new building. The project should be completed by the end of the year. Kraner finds that many are surprised by the size of the jobs taken on by his team of six full-time employees.

Kraner is proud of the fact that he can handle his projects without renting any equipment. He has steadily invested in equipment, and First Financial’s line of credit has been vital for covering regular business expenses so that new equipment can be purchased through “The Bank of Mitch" — his preferred approach.

Proud of his legacy, Kraner is open to what the future holds. He knows he has a financial partner that can support him wherever he wants to take his business — continued growth and expansion, passing it down, or transitioning ownership.

When should a business consider different lending options?

If a company is purchasing a fixed asset such as a vehicle or piece of machinery, equipment financing is the preferred route. Securing equipment as collateral allows a lower rate, longer term, and typically 90%-100% LTV. Other types of loans would be better for situations like the purchase of commercial real estate, or more repetitive needs such as for general operating funds or working capital. If purchasing commercial real estate, we would look to secure the property being purchased. If general working capital is needed, a revolving line of credit is the better option.

In my career I have frequently encountered business owners wanting a line of credit to purchase a vehicle or equipment. In that situation, it is the financial partner’s responsibility to advise their client that a fixed rate, fully amortized term loan is the better option. This not only gives the borrower a lower, fixed interest rate, but it also amortizes over the life of the loan into principal and interest payments. This helps the borrower work towards paying down or paying off the loan, and it avoids a “stale” line of credit.

“I trust First Financial. And I trust my Business Specialist — that she’s going to help lead me down the path for my business to keep doing well. And be honest and tell me what she can and can’t do for me. We work together for both of us to grow.”