2009 Small Business Guide
small business
Finding a small business bank loan

"And some banks specialize in lending to firms in certain industries. It is better to do business with bankers who understand the risk of lending to firms in your industry," says the ABA's Seiwert.

5. Anticipate your banker's concerns. Give your banker an honest assessment of the risks in your industry and how you plan to deal with them. But realize that banks still will analyze risk on their own, of course.

However, "you may be able to provide a perspective that the banker has not thought about," Seiwert says. "And it's important for the banker to know that you recognize the risks and have a plan for dealing with them."

6. Show flexibility in the amount of money and the terms you request for your loan. That's especially important in this period of tight credit. If you sense resistance from the bank to your loan request, consider shrinking the dollar figure.

"That way there's less skin in the game for all parties, and you will build confidence," Sloan says. "As you show you can service a small loan, you will have an easier time building to a bigger loan."

But don't settle for a loan that is too small to help your business grow. "You could be taking more risk if the loan doesn't provide a meaningful impact for you," Sloan says.

You also might want to consider bringing in an outside party to guarantee your loan, thereby easing any concern the bank has about repayment. "If there are people in your network who are angel investors or shareholders, they can act as guarantors to cut the lender's risk," says Sloan.

7. Look into SBA loan programs. The Small Business Administration government agency works with lending partners, partially guaranteeing loans that banks otherwise wouldn't make. "Banks have a level of credit that they will provide on a conventional basis," notes the SBA's Zarnikow. "We allow them to stretch the box further to give additional capital to small businesses."

The SBA will guarantee a 50 percent to 90 percent portion of the loan, guaranteeing about 75 percent on average. In general, the larger the loan, the lower the percentage the Small Business Administration will guarantee. The SBA usually backs loans up to $2 million and as high as $4 million for a few industries.

"The SBA represents a great opportunity to get capital for small businesses," Zarnikow says. For more information, go to the Small Business Administration's Web site; one of the agency's 68 district offices; or SCORE, a small business counseling group that partners with the SBA and has  chapters around the country.

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