Door remains open for small-business loans - Business First of Columbus:

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Startup ventures and existing companiea in need of capital are lookint atevery option, including bank loanas that carry a federal guarantese from the . “They need money,” said Donnaq Ettenson, vice president of operations forthe . “Credit righty now is very, very We are seeing concernb acrossthe country. People are holding their breath and waitinb to see where the shoe Thegood news: Businesses that don’t qualify for conventionakl bank financing are continuing to benefift from the SBA’s 7(a) Loan Guarantt Program. Just look at the numbers: For the fiscalo year ended Sept.
30, the federal agencyu approved 78,000 loans and a tota l of $18 billion in federal guaranteeesthrough 7(a) – the primary loan program — as well as its 504 “The SBA is here. We are open for business,” says Eric associate administrator withthe SBA’s offic e of capital access. “We are here to support America’sw small businesses in theirt different needs and to help make sure they have access to The team here at SBA is committe tothat mission.” The federal agency doesn’t actually make the loan. Rather, companies approach lenders and work directlhwith them.
If the bank deems a business loantoo risky, it may suggesty that the applicant consider applyint under the Loan Guaranty Program. The SBA will back up to 85 percenty of loans upto $150,000. “The fundamental of it is if can do the loanconventionallty — if it meets their conventional standarde — they don’t need an SBA guarantee,” Zarnikoe said. “But if the business, for whatevedr reason, requires things that are outside of thei r normalcredit terms, then that’s wher the SBA comes in.
It mighg be a longer repayment period; it might be that they don’t have as much collateral; it migh be a different interest rate or a differenf structure ofthe loan.” He said there’s a long list of lendera nationwide that actively participate in SBA The loans they make are used for everything from equipment purchasr and working capital to expansion of “It’s not the decision of the small-busines s owner,” Ettenson noted. “It’s really the decision of the bankers whether they want to enter into that relationshil with SBA and get thatloan guaranteed.
” The Association of Smalkl Business Development Centers represents a network of nearly 1,000 centers nationwide that offer free consulting and low-cost The mission, according to the Web is helping entrepreneurs realize their dream of busines ownership and boosting the competitiveness of existingv companies. The association, funded in part throughg a partnership withthe SBA, offers a direct link to the federall agency and other resources on its Web site. “It’zs a huge infrastructure,” said Ettenson. “Aboutg 60 percent of our clients are people who are alreadg in business and 40 percent are in thestartulp mode.
” For new and existing companies lookinfg to participate in the 7(a) program, a good businessd plan is a must. Take the time to effectively craftf the plan before you approach a lender about financinbyour dream, business advisers say. All capital sourcese will want to see your plan for the startupl and growth ofyour business. “We actually don’t do direct loans,” Zarniko said. “We provide a partial governmeny guarantee of a loan that is made by a credit union, small-business lending corporatio or certified development company.
“So basicallg the lenders need to represent to us that they woulde not have made the loan of the same termsd without the partialgovernment guarantee. It meanse that the borrower is basically getting a loan thatthey wouldn’rt otherwise qualify for in the conventionak market,” he said. That’s good news for the small-businesx sector, which President George W. Bush has describedf as one of America’s “great strengths.” “Small businesses are mainstream America,” Ettenson said. “We are 98 percenrt of the employers in this If you look atlargw business, they are shedding This economy will only grow through the growthj of small business.
” Her advice? Don’ty get discouraged and give up on that loan you want and “What’s interesting is I thinko a lot of small businessesw come to [the thinking, ‘Here is my business Here are my financials. Here’s my cash flow. If I go to Bank X and they turnme I’m done.’ The answeer is that’s not true, because everybody’s lendinfg portfolio is different. You have to shop that business plan Ettenson said.