Welcome back to our series on .
This week, we're offering tips and resources for financing for your small business. Last week’s experts, Richard Shoaf and Chris Coleman, are back with more tips for potential small business owners. Bob Russell, the ’s economic developer, also weighs in.
Many people say that securing financing is one of the most difficult parts of getting a small business off the ground, and they’re right. But if you take the right steps to prepare, you can definitely minimize the amount of stress involved.
One of the most common reasons that banks and other lending institutions turn down small business loan requests is that they consider the business too high-risk. Preparing in advance can help you to prove that you’re worth the risk. So how do you do that?
Figure out what you really need.
Evaluate your overall situation to determine how much money you’ll need to get your business started and sustain it until it becomes profitable. The U.S. Small Business Administration (SBA) offers a comprehensive list of questions that you can ask yourself about your business to determine your financing needs.
In some cases, Shoaf said, you might not need a lender. He said it’s important that you don’t overextend yourself.
“We started our company with our investment income and have stayed in the black (out of debt) for the past 19 years,” he said. “Now some businesses just cannot move to the next step without seeking out a lender.”
Russell advises that small business owners first write a business plan to find out how much financing is needed.
“Be prepared to go into the business with some equity of your own,” he said, reiterating that he meant money. “The banks will require a plan before they will consider a loan.”
Research your options.
There are a number of different types of loans and financing programs available. Know your options and don’t be afraid to ask questions.
“The State of Missouri, along with some banks, have programs for small businesses outside of SBA for as little as five percent,” Shoaf said. “This is a great opportunity for those looking to expand existing business or get off the ground.“
Surround yourself with professional advisors, Coleman said.
“There are free or relatively inexpensive courses locally that cover your financing options in today’s lending environment,” Coleman said. “Find a lending institution that has a solid track record on small business lending.”
“Mike Cunningham is a commercial lender from First State Bank should be able to help anyone with information on these programs,” Shoaf added.
Some resources for finding lenders and securing financing
In addition to going to your own bank or credit union, you’ve got a lot of options and resources for financing your small business.
- City of Florissant—Russell said the economic development links on the city’s website will be very useful to business owners working on financing their companies.
- SBA Loan Programs—SBA has a number of different loan programs, each for a very specific purpose. It’s worth checking out the programs to see if you might qualify to participate.
- St. Louis County Economic Development Council (SLCEC)—The SLCEC’s Business Finance department doesn’t offer loans, but it can help you to secure funding. The department is made up of professionals who know how to handle the financing needs of a small business, and they’ll provide you with all of your options, as well as simplifying loan applications and expediting the approval process.
- Greater North County Chamber of Commerce—Though they won’t provide the financing, the Chamber of Commerce can offer advice and support from your fellow local business owners along the way. Whether you’re opening your business in Florissant, your local Chamber of Commerce will be an excellent resource in helping you navigate the waters of business financing.
- Better Business Bureau-Approved Lenders—Several Florissant-area finance and loan companies and financial planning consultants have been accredited by the BBB.
- Missouri Business Resource Library—Finance—The Missouri Small Business & Technology Development Centers, a University of Missouri Extension Partner, has created a valuable resource library on business financing. You can also take a number of courses, some online, to learn more about financial matters for small businesses.
Prepare to meet with the lender.
Before you meet with your lender, be sure to gather all of the documents you’ll need to secure the funding. Some of these will include copies of your tax returns for the past three years, your business plan and your cash flow projections. You can get a comprehensive Business Loan Application Checklist on the SBA’s website, but also be sure to check your lender’s requirements.
In Case You Missed It
- In case you’ve missed previous editions of our small business series, we have shared ideas for choosing a business concept, including the and .
- We’ve also discussed and given tips and ideas on ways to find . We’ve discussed , offered and covered .
- Last week, we discussed the and offered valuable resources for employers.
About the Experts
- Bob Russell is the City of Florissant's ecomonic developer.
- owns several locally-based businesses, including and . Both companies serve business owners in Florissant.
- Chris Coleman owns St. Louis-based FranNet, a company that helps would-be business owners choose and develop franchise businesses. FranNet's clients include several Florissant area business owners, Coleman said.
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