Need Help Getting a Business Loan?

U.S. Small Business Administration offers tips and online resources

Economists have long argued that credit availability is crucial to sustained economic growth and therefore expected to play a pivotal role in the strength of business expansion for the balance of 2012 and into 2013. Going forward, credit availability will be an important factor in Connecticut companies’ ability to fund day-to-day operations, payroll obligations, capital investments, inventory, and future growth.

But, in the wake of the Great Recession, just how readily available is business financing?

“Credit availability readings are up considerably from one year ago, and so the basic uptrend in overall credit conditions remains intact for the time being,” says Farmington Bank President and CEO John Patrick, commenting on the results of the Second Quarter 2012 CBIA/Farmington Bank Credit Availability Survey.

Tips for Obtaining Business Financing

Despite the uptrend, however, more than a quarter (27%) of the 240 companies responding to the survey see credit availability as a problem for their firms. If you’ve had trouble obtaining business financing in the past, the U.S. Small Business Administration (SBA) has this advice:

• Start with a community bank. According to the SBA, data proves that community banks favor small businesses. Thanks to the Small Business Lending Fund program, part of the Small Business Jobs Act of 2010, community banks have increased their lending to small businesses across the country by $3.5 billion.
• Seek out an SBA-backed loan. The SBA does not lend business owners money directly; it provides a guarantee to banks and lenders for money they lend to small businesses. SBA backing mitigates the risk for lenders and makes them more inclined to provide loans to small businesses that don’t qualify for traditional loans. If you are looking for an SBA-backed loan, seek out a bank or credit union that is an SBA Preferred Lender. For more information, visit the SBA’s Connecticut District Office.
• Understand loan application basics. Once you’ve compiled a short list of commercial lenders, learn about the fundamentals of business financing. Every bank will be interested in the viability of your business and its cash flow and collateral. For insight into what you will need to provide and discuss with your lender, refer to the SBA’s Business Loan Checklist. The SBA also offers several free online courses about how business financing works.
• Find a lender that fits your needs. Your relationship with lenders can last many years, so it’s important to be comfortable with them, their business values, and other banking/financial services they can offer. Find out who the decision-makers are, how many people you will have to deal with, and if your bank offers regular one-on-one advisory sessions.

Need financing for your business? CBIA can help. Contact Tom Guerra at 860.244.1160 or tom.guerra@cbia.com.