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Where Do We Go from Here?

The level of frustration some business owners feel when trying to raise capital through traditional commercial banking can lead one to wonder if it’s all worth the effort. Unless there is alternate financing available, a businessperson has to reinvent the process and try, try again. In his book When The Bank Says No!, author Lawrence W. Tuller writes, “As you delve into the world of financing, remember the cardinal rule: money is always available if you look in the right places.”

Where Do We Go from Here?

When the Bank Says No, Where Do You Turn?

Donna M. Gray, CRM, Total Awards and Promotions/AwardsMall.com

(Originally published in the July 2015 issue of Recognition Review.)

The level of frustration some business owners feel when trying to raise capital through traditional commercial banking can lead one to wonder if it’s all worth the effort. Unless there is alternate financing available, a businessperson has to reinvent the process and try, try again. In his book When The Bank Says No!, author Lawrence W. Tuller writes, “As you delve into the world of financing, remember the cardinal rule: money is always available if you look in the right places.”

Recently, at an industry trade show, I saw lots of interest in some big-time equipment and heard industry peers discussing ways to finance their new toys. For some, the struggle comes when they have not yet built a solid relationship with a lender. Some newbies may not qualify for leasing options. Some need the equipment to stay on the cutting edge but must spend time searching for the financing partner needed to help their business grow. Their typical question is, “Where do we go from here?”

Many business owners give up on their quest for financing when their bank says no, but lending experts suggest that a no might just mean it’s time to re-assess the situation by asking why the request was denied and then getting to work to correct the situation. On the other hand, sometimes a no can be a definite no!

Raising capital can be scary, but searching for options can help you get needed cash for equipment, inventory, facility improvement, and marketing, among other needs. Before anything else, get a good business plan ready. Lenders won’t accept your general idea of where their money might go. They want details on not only why the money is needed, but where exactly it will be spent and the assurance that it can be repaid in a timely fashion—with suitable interest, of course. Lenders will ask tough questions. A solid business plan will prepare you to answer these questions.

Wouldn’t it be nice to have money more available when needed? The good news is that the economic situation is improving and more lenders are willing to make small business loans. Your chances of gaining funding, and doing so in a timely manner, improve when you have an organized business plan.

Because business and equipment financing is sometimes a topic of conversation at industry get-togethers, I asked some lender friends to share their expertise on what small companies should do to increase chances of securing the financing they need. Here are some of their suggestions:

  • Business should have documentation from at least 1–3 years to qualify for a bank or Small Business Administration loan. Most lenders will look closely at credit history before they make any decisions. Personal credit scores and anything in a credit report can raise a red flag, especially since most banks will require a personal loan guarantee or a lien on your home if the business doesn’t have sufficient collateral to cover the loan principal.
  • Having a company policy and procedures manual and strategic job descriptions for team members make the application package look better.
  • Go to local lending institutions. National banks will be less likely to entertain a loan if a business has not been profitable for the past 3 years.
  • Credit unions are becoming more and more aggressive and involved with business lending needs. While your company may have to buy into the credit union with a savings deposit, they can be a great source of both short and long-term financing. It helps if the business owner has had a prior relationship with the credit union.
  • Tell your company’s history briefly. Share details of when, why, and how the business started, complete with any story behind the business’ creation. For instance, I would share that our business started as “a joke” on April Fools Day in 1977. Yes, there’s a long story to that, but I only tell it when asked. It’s my guess that a lender may be inclined to ask.
  • Provide information about key team members. You can even add up the team’s years of experience in the industry and include that fact. This can be an eye-opening factor in the company’s credibility.
  • Check out alternative financing for the short term. Alternative financing is on the rise. Short-term options for creative financing from companies like Kabbage and OnDeck Capital require you to do your due diligence before signing. You must know all of the ins and outs of the payback methods.
  • Crowdfunding is a hot topic in small business financing. Congress passed the Jumpstart Our Business Startups (JOBS) Act in 2012, and many in the business world thought crowdfunding would be the perfect answer to the financing needs of small businesses. It’s not perfect, but it seems to be working for charitable fundraising. If your company is interested in crowdfunding, learn more at www.business-solutions-and-resources.com in the Money to Start a Business report.
  • If a company is established and is selling products or services on terms, one can “sell” invoices to a factoring company to get quick cash instead of waiting for customers to pay their bills. As you can guess, factoring companies don’t do this for free. They charge high rates for this privilege.
  • When quick, usually short-term money is needed for special projects or equipment, you can call on family, friends, and employees. Not too long ago I chatted with some friends who had lent “short-term” money to a relative some time ago. Payment has yet to be received. It’s not good to borrow from those close to you unless you are positive you can repay the loan on time. According to my friends, it’s difficult for them to keep smiling around those relatives right now.
  • The lending experts suggested that while this may seem like a unique kind of business funding, seeking financing from customers is much more common than you would think. The key to this kind of financing is to have something the client wants and then to ask them how they can help with upfront financing to make a deal happen. This doesn’t really appeal to me, but it must work for some.

As the economy continues to improve, lending experts think it will become easier to say yes to small businesses that have good business plans backed by good reputation and good payback records. If a company does get turned down, they suggest the owner should ask loan officers what other local institutions are making loans to their industry or area.

Another good piece of advice I received is that a business owner should create a relationship with a lender before marching in and asking for a loan. The best information I got from these experts is that there are always other options, so “where do we go from here?” always has an answer.


Donna M. Gray, CRM, and her husband, David L. Gray, CRM, are owners of AwardsMall/Total Awards, Promotions and Gifts, a full-service awards and personalization business in Madison, WI. Donna oversees all facets of the organization and directs sales and marketing for all company products, such as awards, donor walls, custom pins and medallions, and promotional products.

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