Small Business: Asking for money

By Beth Pratt

No one likes asking for money, (with the exception of my children), but if you own a business, chances are you'll have to either sooner or later Š or both. And no matter how great your business or certain the success of your idea, no business speaks for itself.

A financing proposal or a business loan application communicates your business's financial position, the quality of its management and the degree of risk it offers potential lenders. When preparing a financial proposal, it's important to put yourself in the lenders' shoes and ask yourself how well your proposal addresses some key issues.

In approaching a bank or other financial institution for a business loan, you can rest assured that all lenders will want satisfactory answers to the following basic questions:

* What is your character? Will you want to repay the loan and do you have a solid history of repaying your obligations?

* How capable are you in managing the business? Will you be able to repay the loan?

* Do you have a clear financial plan showing the need for the loan? Can you demonstrate reasonable assurance that your financial projections are realistic?

* How will future economic trends affect your business? What is the general outlook for your industry? What is your competition up to?

* Is the loan request large enough to cover unexpected changes in your business, but not so large that repayment may be overbearing?

* What collateral is available to secure the loan?

* Do you have a reasonable amount at stake in the business? What have you already put into the venture?

When you initially meet a banker it is important to demonstrate confidence and integrity. Don't try to hide facts about your business; it's very important to disclose any problems or concerns early in the process and work with the lender to overcome them. Hiding problems will be a red flag to most lenders and possibly have a negative effect on the lenders perception of your character -- one of the criteria used to evaluate your proposal.

Obtaining financing to manage the growth of a business takes preparation, persistence and patience. Businesses usually think bankers take too long to make decisions, and bankers usually think business owners are in a rush. Keep in mind the process takes time, which underscores the importance of cash flow planning and projecting future financial needs.

Remember, too, that lenders are in the business of making loans -- they need you as much as you need them. Work to develop a positive relationship with your bank or financial institution. Don't forget local banks -- they usually have a commitment to supporting local businesses.You have a great opportunity to meet many of our local bankers and start down the path to obtaining financing at the Small Business Financing Expo sponsored by the Napa Valley College SBDC, the Solano SBDC and local lenders on Thursday.

The event is free to local businesses and will take place at the USA World Classics Museum in Vallejo from 3 to 6 p.m.

The expo provides the venue and a wonderful opportunity for small businesses to learn about small business financing, how to qualify and the specific methods to apply. The event will bring together more than 30 local and regional financial institutions and small business resources providers. Many of our local bankers from Umpqua Bank, Union Bank, 1st Pacific Credit Union and the Vintage Bank will be on hand to answer business owners with banking related questions. Small Business Financing Expo will begin with a workshop at 3:30 p.m., featuring a panel of small business financing experts.

The trade show portion from 4:30 to 6 p.m. includes financial institution exhibitors and resources from staffing, insurance and marketing organizations. To register for the Small Business Expo call the Napa Valley College Small Business Development Center at 253-3210.

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