Representatives from the U.S. Small Business Administration (SBA) and other business financing experts told restaurant operators at the 2011 NRA Show in Chicago that startups and established businesses alike should be thorough in their hunt for financing—and to be aware of the many opportunities provided to them by the SBA.
Robert Esquivel, lender relations chief at the SBA, said during an education session at the show that in fiscal year 2010, the SBA delivered more than $17 billion in financing and guaranteed 60,771 loans to small-business operators.
The amount of lending grew with the help of the Small Business Jobs Act of 2010 signed by President Obama in September, which allowed for higher loan limits from the SBA. This act, along with many programs available to small-business operators from the SBA, such as those for minorities and women, is expanding the tools and resources available to operators needing financing.
Esquivel says more banks are partnering with the SBA as the economy continues its slow recovery—not necessarily making capital access a sure-fire guarantee, but at least providing operators with more potential lending suitors.
“There’s going to be a lot more knocking on doors to look for lending, but there are more lenders out there,” he says.
While discussing SBA opportunities with partner banks can help small-business operators secure capital, there is a certain amount of due diligence they have to do first to make their operation more attractive, the experts say.
Doug Cannon, business analyst for the Chicago Community Ventures organization that supports small-business operators in the Windy City, says business operators should meet with counselors and other experts to revise their concept before the hunt for capital.
Cannon says operators must also be willing to change ideas about their concept that they may be particularly attached to. Staying flexible and tweaking the concept to offer the most business potential is necessary to secure financing.
“The last thing I want to tell a business is that this is your baby, but your baby is ugly,” he says. “I want to tell a business, ‘This is your dream, so what’s the easiest way to achieve your dream?’”
Cannon suggests that established business operators listen to what consumers want from the business in order to fine-tune the operation for lending approval.
“It’s amazing how many problem s your customers can solve for you,” he says.
Joshua Gutstein, senior financial analyst for Chicago Community Ventures, says small-business operators should avoid looking for lending from big banks, unless they plan to export their product overseas.
He says “second-tier” banks also aren’t necessarily the right banks to talk to about financing; instead, “third-tier,” or smaller, banks are often the best option to discuss financing with.
Perhaps the most important thing for small-business operators to remember in the hunt for financing, the experts say, is to seek far and wide for different lending partners.
John Nevell, regional manager of international trade programs for the SBA, says there are many different “pockets” of money in different places—including through the SBA—that operators can collect to support their business.
“Don’t be satisfied with the first answer you get from the first person you talk to,” he says.
By Sam Oches