Insights into the world of small business lending and development

America’s SBDC and Venturize ask the tough questions about becoming loan ready

In celebration of our new partnership with America’s SBDC, Venturize co-hosted a Twitter chat during National Small Business Week to talk about the top tips and resources to help small businesses and aspiring entrepreneurs become loan ready. We were happy to be joined by our friends at Intuit QuickBooks, the New Jersey Business Action Center, Small Business Majority, BIGG Success and BizBuySell. There were also a number of SBDCs that participated, including the Arkansas Small Business and Technology Development Center, New York SBDC, University of Minnesota Center for Economic Development and Temple University SBDC.

Below is a brief recap of the questions and a sample of the great tips and information shared during the chat:

Q1: What are the different options out there for small business owners looking for credit? What types of lenders and credit products are available to small business borrowers?

New York SBDC @nysbdc

A1: Loans through commercial banks are the most common. Other options include economic development loans, which are usually low-interest microloans available through local or regional organizations, private equity investors & crowdfunding. #SmallBizChat #SBDC #SmallBusinessWeek

Intuit QuickBooks @QuickBooks

A1: We’ve identified the pros and cons of the 5 most common ways business owners can fund future #growth. One option: a working capital business loan, read on here: https://intuit.me/2LugeTa #SmallBizChat

University of Minnesota Center for Economic Development @UMD_CED

A1: For start ups financing is difficult but a bank using the SBA loan options is one of the best options. #SmallBizChat

Q2: How can a small business owner determine how much they really need?

Arkansas Small Business and Technology Development Center @ASBTDC

A2: Do your homework to figure out how much funding you need.
- Be as accurate as possible about startup costs and monthly expenses.
- Be realistic about sales.
- Visit your local SB(T)DC. We have tools to help you build solid financial projections.
#SmallBizChat

Intuit QuickBooks @QuickBooks

A2: If you’re ready to take your business to the next level, ask yourself these 4 questions to evaluate if a #smallbusiness loan is your best course of action https://intuit.me/2WvS0Zx . You can also use one of our loan calculators. #SmallBizChat #SmallBusinessWeek

Q3: What are the factors that banks look at when considering a small business loan application?

Temple University SBDC @TU_SBDC

A3: Certainly the 5 Cs but banks also have preferences when it comes to industry & loan size. That's why it is important to connect with organizations like SBDCs who know those preferences and can connect you to your best match!  #SmallBizChat @ASBDC

Small Business Majority @SmlBizMajority

A3: Banks look at more than credit score when considering loan applications. There are a number of other things, from business plan to loan application history, that play into the decision. See a full application checklist on @VenturizeOrg: https://venturize.org/loan-application-checklist #SmallBizChat

Q4: What should small business owners understand about their own credit score and how it will factor into a loan decision? How can they find their credit score?

BIGG Success @BIGGSuccess

A4: (1 of 2) Your credit score is the quantifiable part of Character, one of the 5 C’s considered by lenders. Local lenders may also consider subjective factors. National lenders are more likely to zero in on the quantitative. #SmallBizChat #SmallBusinessWeek #SBDC

A4: (2 of 2) Credit card companies, banks & loan companies have starting publishing credit scores on your statements or in online accounts. You can also check your credit score free w/ Experian, TransUnion, Equifax once every 12 mo. See https://annualcreditreport.com/  #SmallBizChat

Q5: Does a business owner need collateral or equity to get a loan?

New York SBDC @nysbdc

A5: Yes, especially for a bank loan. Some non-bank lenders, such as microloans, may have less stringent requirements but will still require the applicant to have a personal investment in the project and will seek collateral if it is available. #SmallBizChat #SBDC #SmallBusinessWeek

BIGG Success @BIGGSuccess

A5: Generally both. Equity – so you have “skin in the game,” i.e. you can’t just walk away and leave the lender holding the bag. Collateral – because it’s their second exit strategy. If you can’t pay back the loan from profit, assets could be liquidated. #SmallBizChat

Small Business Majority @smlbizmajority

A5: Traditional loans often ask that you provide some sort of collateral for your loan. Fortunately, there are many alternative funding options like CDFIs that can work with you even if you don’t have significant collateral. Read more: https://smallbusinessmajority.org/blog/exploring-alternative-funding-options-what-cdfi #SmallBizChat

Q6: If someone doesn’t have collateral or a high credit score, can they still get a loan? What options are there for people who can’t get a loan from a big bank?

BizBuySell @BizBuySell

A6: SBA loans! They are easier to obtain because it’s a government-backed loan. You can find an SBA lender @SBA here https://www.sba.gov/funding-programs/loans/lender-match #SmallBizChat

Small Business Majority @smlbizmajority

A6: Our partners at @CDC_Loans have a great video series that will teach you all about fixing your credit and what to expect from the lending process: https://cdcloans.com/blog/fix-your-credit-yourself-video-series/ #SmallBizChat

Q7: What else does a small business owner need to prepare before applying for a loan?

Arkansas Small Business and Technology Development Center @ASBTDC

A7: Getting business financing is more time consuming than getting a personal loan or mortgage. Plan ahead and allow adequate time. #SmallBizChat

University of Minnesota Center for Economic Development @UMD_CED

A7: A business plan, financial projections, personal financial statement are all a start. Purchase agreements, lease agreements, etc...Each bank or lending institution has its own requirements.  #SmallBizChat

Q8: What questions should a small business owner ask of any lender?

Intuit QuickBooks @quickbooks

A8: 1/2 If you’re in the market for a loan, we’ve provided seven factors that can help you choose the best #loan for your business. https://intuit.me/2WvTbrV
#SmallBizChat #SmallBusinessWeek

A8: 2/2 Also, check out a list of typical loan fees and costs lenders may charge https://intuit.me/2Wu8MIH #SmallBizChat

New York SBDC @nysbdc

A8: It’s important to know the terms of your loan. That includes interest rate and term but also ask about collateral requirements, early payment penalties, any fees associated with the loan and closing costs. #SmallBizChat #SBDC #SmallBusinessWeek

New Jersey Business Action Center @NJ_BAC

A8: Very important to be clear on all the terms of the loan. What is the business responsible for? #SmallBizChat

We would like to extend a big thank you to everyone who participated in and followed along with our first Twitter Chat. Check out all the participants on Twitter for more resources on funding options and follow us on Twitter at @VenturizeOrg to learn about future chats.

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