It’s a perfect time for small business owners to explore borrowing options

Tom Kindred meets with SBA officials

Tom Kindred meets with SBA officials at recent 2021 Florida Association of Government Guaranteed Lenders Conference.

In traveling throughout the Treasure Coast region, speaking with business owners, operators and economic development leaders, one issue is clear — the region is growing. This market growth could and should translate into potential revenue expansion opportunities for small business operators.

To take advantage of growth opportunities, a business owner might need to purchase new equipment, relocate to a larger building, increase inventory or enhance and update technology. Executing these moves also might require the business to access additional capital. Accessing additional capital will require two factors: a favorable lending environment and a bankable business.

Let’s start with the first factor. I recently attended and worked the Florida Association of Government Guaranteed Lenders Conference. The Small Business Administration along with other prominent SBA lenders presented data that demonstrated record loan numbers.
Every SBA loan category was up year over year, this includes 504 and 7[a] loan programs. These loans provide financing for the purchase of fixed assets, real estate, buildings and machinery. The 7[a] program can also provide financing for short- and long-term working capital. So check the Favorable Lending Environment box.

Issue No. 2. Is your small business bankable? Let’s start with the definition: bank·able BANG-kә-bәl adjective 1. acceptable by a bank; 2. considered powerful or stable enough to ensure profitability. noun: bank·ability.

Building a bankable business begins and ends with consistent profitable business operations. The business must be profitable for multiple years to demonstrate the ability to service debt. Proof of profit comes in the form of business tax returns.

A bankable business also includes a cogent and comprehensive business plan that tells the following story about the owner and the business according to the, 5 C’s of Credit:

CHARACTER: Because a credit score remains the first and foremost indicator, it is important to know this number and what affects it. It is also important to be able to accurately convey expertise in an industry, cite references and highlight credentials.

CAPACITY: Demonstrable ability to repay the debt incurred as well as cover expenses as indicated by financial statements. Keep those records up to date and available and this includes a personal financial statement, a requisite for all borrowers on the note so be prepared to provide it.

CAPITAL: Committed with personal funds; “skin in the game.” Investments in business inventory, equipment, etc. When applying for an SBA loan, an applicant typically needs to have 10% to 20% to put toward the project.

COLLATERAL: Lenders will want to reduce risk through securing the loan with personal or business assets whenever possible.

CONDITIONS: Be clear on the purpose and specific use of funds. Become knowledgeable on market conditions, industry trends as well as having reasonable assumptions and projections that can be easily supported.

Now is the time to take advantage of strong market and business conditions or as my dairy customers used to say: Make hay while the sun shines. If an organization’s growth and expansion plans require additional capital, leverage the experience of Bill West, a capital access specialist with the Florida SBDC at IRSC, to explore borrowing opportunities.

Beyond capital access, use all the business assistance resources provided by Indian River State College and the Florida SBDC at IRSC to identify, analyze and assess all needs and opportunities.

For more information on Florida SBDC at Indian River State College, send an email to [email protected]RSC.edu or call 772.336.6285.

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