10 Things I Know About ... Small Business Lending
Parker
10. GET PROFESSIONAL HELP
You're great at what you do, but not an expert in everything. Consider having an attorney, accountant and banker on your team.
9. SEEK OUT FREE OR LOW-COST ADVICE
There are many free or low-cost resources for start-up and existing businesses. They include SCORE, the Massachusetts Small Business Development Center, the Center for Women & Enterprise and your local chamber of commerce.
8. HAVE A BUSINESS PLAN
A business plan is an essential tool since it can help you determine how you will win market share. You must distinguish your business from your competition.
7. HAVE TAX RETURNS AVAILABLE
Call ahead and find out what you need for a meeting with a bank. Have copies of your tax returns for the past three years.
6. KNOW SBA AND MASS CAP
SBA offers a variety of loan programs for specific purposes. Study them at sba.gov/loans, to see if you qualify. And the Massachusetts Capital Access Program (CAP) helps small businesses (with less than $5 million in revenue) obtain loans.
5. BE SURE YOU HAVE SOLID CREDIT
Pay your personal bills on time. Late payments will hurt your credit rating and maybe your chance of securing a loan or a favorable interest rate.
4. HAVE CASH OR COLLATERAL
A bank will not give you full financing. You need money down.
3. STAND BEHIND THE LOAN
Don't faint when a bank asks you to personally guarantee a loan. It's common practice and the bank wants to know you're fully invested in the project.
2. NOT ALL INTEREST RATES ARE ALIKE
Don't expect to get the same rate as your friend. There are many factors that go into quoting an interest rate.
1. KEEP CASH FLOWING
The bank will consider cash flow to determine whether you can repay the loan you're requesting, plus any debt you have.
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Bobbie Parker is assistant vice president and a commercial loan officer at Rollstone Bank & Trust, based in Fitchburg. Contact her at roberta. parker@rollstonebank.com.
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