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Small Business Lending in Today’s Marketplace

For those businesses that are ready to take the next step, they often quickly realize they need more capital. Traditionally, they would do that by getting a business loan.  But how do you obtain a loan in today’s marketplace?

Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn’t always easy. Yes, it is possible and there are lenders out there who are willing to lend. You will need to determine what the loan is for and how much the need is. As a former Banker, we all use the five C’s of credit. So what are the 5C’s and what is the bank looking for:

Cash flow
Is the business generating enough cash flow to repay a loan? The bank will look at historical tax returns and financial statements, projected cash flow will be taken into consideration as well. You must be able to defend your projections and explain how you arrived at them.

Collateral
The bank will normally want the collateral to be the same as the loan amount or exceed the loan amount; all collateral will be discounted and not used at 100% of value.

Capital
The lender will want the owner to have equity into the business to withstand any blip in the company’s ability to generate cash flow

Conditions
The key factor in the overall environment the company is operating in. The bank will assess the conditions surrounding your company and its industry.

Character
Arguably the most important, the character of the owner and management of the company is paramount to the lending process.  Are they honorable people? In the end banks want to deal only with people that they can trust to act in good faith at all times.


Marge Cirillo has entrepreneurial experience that includes owning and operating three highly successful restaurants and catering service for eight years. After selling the restaurants she went to work for the SBA Disaster Team as a loan specialist. She has also worked for Certified Development Companies as an underwriter and marketer of the SBA 504 Loan program. Before joining the SBDC Marge was an Assistant Vice President at a community bank specializing in SBA lending. She now serves as the SBDC liaison in St. Augustine, Florida.
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