Reginald Harley, a lead lender relations specialist for the SBA, explained that it’s his responsibility to educate lenders about SBA products and to work with them to get the word out to communities about the differences between SBA and conventional loan products. Typically, when potential borrowers walk into a bank, he said, they are not approved, whether it is because they are lacking sufficient collateral or that they are a startup business. “That’s where the SBA comes in,” said Harley.
For borrowers that fall short of a bank’s requirements, the SBA can attach a guarantee to the loan, which gives the bank peace of mind that the loan is adequately secured. In the unlikely event that the loan doesn’t perform as hoped, the bank has the opportunity to have the guarantee honored.
Michael Cusack, senior consultant for the Louisiana Small Business Development Center (LSBDC), strongly recommended that booksellers become familiar with the SBDC that covers their area, so they can take advantage of SBA-funded technical assistance, training, and resource development that the centers provide. SBDCs help business owners develop business plans and presentations aimed at garnering financing by working closely with both SBA and banks and knowing what is needed, he said. The nearest SBDC can be found by entering a zip code on the organization’s website.
SBDCs have partnered with companies that provide complementary services to small businesses, Cusack said, including Google, Intuit, Quicken, Palo Alto Software, Constant Contact, Fraudnet, NASE, the U.S. Postal Service, and Sprint.
As a result of Hurricane Katrina, SBDCs also offer a Sustainability program (formerly known as Recovery), a more comprehensive service that allows businesses affected by natural disasters, fires, and floods to work with consultants on staff who are trained in business sustainability.
Todd Higgins, a certified business consultant for SCORE, discussed the opportunities available to those who are considering opening a business. SCORE is made up of volunteers from various professional backgrounds and provides potential business owners with free services. Higgins stressed the importance of knowing your bankers so they can get the best possible sense of your business. SCORE helps clients develop business and marketing plans and works closely with both SBA and the bank to find out what exactly is needed for a particular client’s business plan to get approved.
Tyrone Hubbard is a commercial lender at Gulf Coast Bank and Trust, which is a partner of SBA, LSBDC, and SCORE. From a banker’s perspective, he reiterated the importance of fostering a relationship with potential lenders to allow them to get to know you and your business plans. “If that person doesn’t know your business, how can they help?” he asked. “If they haven’t invested in you as a customer, they may not be able to adequately helpful.”
He also stressed that working with the SBA gives business owners more credibility. By working with the SBA, borrowers are able to reduce their monthly payments by extending their payout period on a loan. “When a business owner walks into a bank and demonstrates they’ve already been working with [SBA or SCORE], that lender is going to listen more intently,” said Hubbard. That’s going to make a difference.”
See this week’s related article on the SBA’s Microloan Program.