Building relationships may be the key to receiving a small business loan and more access to capital. Coincidentally, Dun & Bradstreet Credibility Corp. Chairman and CEO Jeff Stibel, and MultiFunding founder Ami Kassar, who recently spoke at our Access to Capital event in Chicago, offer loan advice to help get the “Yes” everyone wants to hear.
Kassar sympathizes with business owners who struggle looking for capital while having to successfully run a business. He suggests making sure you understand how the process works. Find an adviser or mentor you trust who has been in a similar situation and can help you over the bumps.
What Can Be Done:
1. Take the time to cultivate a relationship with a banker
According to Mark Sunshine, “Like the worried father of a teenage girl, credit officers are skeptical and conservative. They don’t want to make mistakes and they feel responsible for the health and welfare of their institution.” Befriending a banker or lender will help encourage them to take that leap of faith with you.
2. Look into your business credit file
In a recent conversation with The Associated Press, Stibel talked about Dun & Bradstreet Credibility Corp. compiling credit reports on small businesses, which banks can buy to help make their lending decisions. Knowing what’s in your business credit report can give you a better idea of how banks may regard your business.
3. Create an organized business plan
In a recent panel from Access to Capital, an event hosted by DandB, Kassar said, “It is really critical not only to get your books, your information and story in order, but to understand what you want the money for and why and how. Usually when these lenders are asking you questions it is for a good reason.”
4. Know and understand the bank’s philosophy
Some banks make more loans secured by assets like real estate, while others lean toward companies with good cash flow. “Not knowing what their criteria is before you walk in the door is a recipe for disaster,” Stibel says.
The Follow Up:
Stibel’s advice: “You should have, if not quarterly meetings with your lending officer, at least two times a year, even if it’s nothing more than going out to lunch and saying how great your business is. You don’t want to have your first meeting when something’s wrong.”
Were you recently approved for a loan? How did you get to a “Yes”?
[CC photo by Life Mental Health]