The Secret to Getting Small-Business Loans –OPEN Forum
The recession is over and entrepreneurs are looking for cash, but are banks willing to lend? The answer is a resounding yes, according to reports at OPEN Forum. OPEN Forum’s Katie Morell talks to lending and credit experts to get the tips you need to get that loan application approved. Â Here’s what she found out:
Bankers emphasize that borrowers need to present a solid picture of their business and themselves. Here’s what they’re looking for in potential lendees.
Come into a lending meeting with your accountant or lawyer in tow to immediately establish a degree of credibility. The presence of such professionals shows that you are serious and have done your homework, says Morgan Johns, senior vice president atÂ Conestoga BankÂ in Pottstown, Pennsylvania.
If you donâ€™t have professional backup or need help putting together your business plan, visit a localÂ SCORE chapterÂ where aid is free.
If you want to launch a hair salon but lack cosmetology experience, you may want to think twice before booking a lending appointment. Banks want to see that youâ€™ve spent time in the industry you want to enter, says Jana Rouble, business-development officer forÂ Fidelity Bank, a community bank with locations in Georgia and Florida.
Healthy Credit Score
Personal credit is more important than ever, says Ellis. Banks are not only taking a chance on your business, they are taking a chance on you, personally.
Even if you donâ€™t have a credit score in the high 700s, you still may get a loan. A variety ofalternative funding companiesÂ are eager to help.
Compound Profit of ArizonaÂ is one such company. Regional director Christy Giroux explains that she taps resources ranging from invoice and financing companies to credit card processing lenders to secure financing for small business owners.
Alternative financing companies like Compound Profit often use factoring to help offset costs, a process that trades accounts receivables (and a percentage of transactions) for quick cash advances to a budding small business.
Gone are the days when banks would lend to entrepreneurs whose entire livelihoods were riding on a business plan. Today, lenders want to know that you have a solid source of secondary income, notes Johns. Make sure to bring detailed financials for your second job, your spouseâ€™s income, rental income, etc. This also extends to how much equity you can put down right off the bat.
â€śIt depends on the project how much we require you to inject into the project at the outset,â€ť says Cameron. â€śBut we definitely want to know that you have some skin in the game.â€ť
Number-Rich Business Plan
Bankers want to see aÂ business plan with promise, but, according to Rouble, they are even more interested in the numbers.
â€śIf they canâ€™t sit down and tell me how many customers they need per day and how much money each customer needs to spend, Iâ€™m not interested,â€ť she says.
Conestoga Bank is so serious about limiting loans to entrepreneurs with strong work ethics that it sends employees to visit businesses before releasing funds.
â€śWe want to go out and kick the tires a bit,â€ť says Johns. â€śI want to know that you have the right character to pay back a loan.â€ť
Plus: If you’re trying to fund a high-tech startup, check outÂ Katie’s interview with three accelerator foundersÂ to get the inside scoop on getting accepted.Â
Best Banks for Small Business LoansÂ â€”HuffingtonPost
SBA Head Looks Beyond Loans to Help Small BusinessÂ Â â€”Bloomberg BusinessWeek
Small Business Loans and Small Loans to BusinessÂ â€”Business Insider
Wells Fargo Reports They Approve the Most Loans for Small BusinessÂ Â â€”Loansafe.org
Local Small Business Loans on the RiseÂ â€”Las Vegas Review-Journal
Legislators Look at Increasing Credit Unions’ Small Business Loans CapÂ â€”Austin American-StatesmanÂ
Small Business Administration (SBA) LoansÂ Â â€”SBA.gov
If Only it Were That Easy