There are loans out there
You may have to stretch your search parameters, but loan money is available to small and mid-size businesses. Banks and micro loan funds are the places to look:
• Yep, banks. Although many banks have cut off lending, often to bring financial ratios in line with what federal regulators require, others have their loan windows open - for both conventional and SBA-guaranteed financing.
Finding a bank willing to make a small business loan is time consuming but doable. One bank lending throughout the Chicago market is Evanston-based First Bank & Trust, where, says Randall Usen, senior vice president-commercial lending, "There's money available."
The bank's process is pretty straightforward. "Our underwriting is the same today as it was 10 years ago," Usen says. "We're not a credit scorer. We're a traditional underwriter."
Essentially, that means the bank looks at the business' financial statements, evaluates collateral and cash flow, and pays attention to the owner's personal financial status.
Pass muster and fall somewhere within the bank's rather large $50,000 to $5 million loan sweet spot, and your business has a good shot at financing.
About 80 percent of First Bank & Trust's loans are conventional, Usen says.
"We use SBA programs when our loan policies won't permit the loan but the loan meets SBA standards." (The Small Business Administration guarantees a portion of the bank's stake when a business loan meets SBA qualifications.)
Note that First Bank & Trust isn't the only bank making loans. Usen suggests "networking, talking to other business people and professionals" such as your accountant to determine which banks are lending.
• Micro loan funds. By definition, micro loans are small. The average loan at ACCION Chicago, for example, is $8,000. There is a $25,000 maximum on loans for established businesses and a $15,000 top for businesses with less than six months of revenue history.
The ceilings aren't a problem, and the fund's loan officers are busy.
"We rarely get loan requests for as much as $25,000," says Jill Stephens, vice president of lending and marketing. Through July, ACCION Chicago granted 116 loans, slightly more than double the number during the same 2008 period.
Most of the loans are in Cook County, but the Chicago-headquartered organization has established several beyond-Cook suburban beachheads. Late last month, ACCION Chicago teamed with the Illinois Small Business Development Center at College of DuPage to allow businesses to submit loan applications at COD offices in Lisle.
The COD application program is cousin to an ACCION-SBDC loan application service at College of Lake County, Grayslake, and to similar programs at Governors State University in University Park and Kankakee Community College.
Like most micro loan funds, ACCION Chicago serves businesses that do not have access to traditional - usually bank - financing.
• Questions, comments to Jim Kendall, JKendall@121MarketingResources.com.
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