Dana Bondy, senior vice president for business banking at Colorado State Bank and Trust, likes to make lists, and so he made one during a panel discussion last Wednesday on small business access to capital. Not a "top" 10, and in no particular order, here is his list:
- Communicate with your lenders, sharing both good and bad news about your business.
- Get behind your results to take credit for your successes and accountability for your losses.
- Ask a lot of questions of your banker or lender.
- Listen to your lender's answers to those questions. He or she provides an honest perspective on the risk and potential presented by your business proposition.
- Expect great partners in your lenders. Expect them to return your calls, and be quick to return theirs.
- Get specific when asking for money.
- Work with the decision-maker on your loan.
- Connect to business-finance resources like SCORE, a group of retired execs who do business counseling, or SBA or your local Small Business Development Center, all of which give free advice.
- Connect with your peers. Many small business owners have already experienced the problems you may be facing in operating your business. Learn from their experience.
- Shop your loan request around until you find the lender who wants to loan you money; any banker's advice about your business proposal, even if he or she turns down the loan, is valuable to you as a business operator.
Bondy was one of four bankers who spoke at a forum on access to capital hosted Wednesday by U.S. Rep. Diana DeGette. Bondy was joined on the panel by Mark Abell of Vectra Bank Colorado; Mary Rogers of JPMorgan Chase, who said she was the national spokeswoman for Chase on small business; Alan Ramirez, senior commerical loan officer at the Colorado Enterprise Fund; and Greg Lopez, Colorado district director of the Small Business Administration.
The bankers' collectively suggested a willingness to lend to business owners who did their homework and presented viable proposals, but they also admitted their institutions might be among the nine of ten that reject a loan proposal before one institution accepts it from a specific business owner.
That was the point of Bondy's 10th item on his list. Just because a banker doesn't review your loan proposal favorably doesn't mean he or she can't teach you something about the proposal while reviewing it. Take all the advice you can get and move on to the next banker.
Access to capital is a traditional complaint of small business owners, and Rogers from Morgan Chase admitted credit got very tight during the financial crisis of 2008-2009.
But she said her bank's loan window didn't close altogether; it lent $8 billion in business loans during 2009 and has been increasing that number by multiples of billions ever since, looking forward to another increase in 2012.
Abell of Vectra Bank said Vectra didn't change their lending policies throughout the crisis years, and he gave examples of borrowers who backed up their proposals with good information and obtained loans even during the hard times. Ramirez explained the Colorado Enterprise Fund's goal is to lend to companies that cannot obtain capital elsewhere. He said the fund loaned $3.1 million in 2011, averaging $30,000 a loan.
SBA district director Greg Lopez said it was a moral obligation for the people on the panels to help small businesses succeed. He said SBA in Colorado guaranteed 1,425 loans with a value of $619 million last year.
He also said SBA is about to roll out a program that will partially guarantee loans based on contracts the borrower holds with customers. Contracts, or the promise of future revenue, traditionally have not been considered collateral, preventing many firms from obtaining the capital they need.