Every business owner should establish relationships with potential funders early and keep them appraised of the business’ progress on a regular basis. Wherever possible, secure funding before you really need it, and pay off what you use on time. You’ll build an essential track record and credibility. Consider your commercial banker a key partner in your success. Secure a line of credit appropriate to the current resources and potential revenues of your business. If you qualify, apply for a guaranteed Small Business Administration loan. (Note: The discussion that follows focuses primarily on banking. For a comprehensive overview of startup funding sources, visit section 7. Raising Money.)
Cultivate a Meaningful Commercial Banking Relationship
Banks compete vigorously for commercial banking accounts. So when you go shopping for a banking relationship, be on the lookout for just how far your bank will go to win and keep your business. According to Tracy Kellaher of commercial loan matchmaker Biz2Credit Business Loans, your banker should :
- Take the time to learn your business, so he or she can understand and even anticipate your needs. They should look for ways to offer business-friendly products and services.
- Be responsiveness and offer consistent service. You can’t build a relationship if you have to talk to a different person every time you call or visit.
- Impose reasonable fees. If your bank is “nickeling and diming” you fees for every possible service, find another bank.
- Offer a consultative relationship. Expect your banker to support you when you’re growing and to work with you when times are tough, guiding you on ways to meet loan payments and maintain good credit
- Offer a broad range of online banking services. Banks that go beyond online account management to offer tax and accounting assistance, online loan applications, payroll services, check deposit and collections are a big draw for business owners, notes Kellaher.
Private Sector Lending Still Limited
Since the economic downturn, credit has remained tight across the board, causing many small businesses to assume that their best source of funding is alternative channels such as angel investors and venture capital funds. Indeed, the U.S. Small Business Administration released a report in July 2013 noting that lending to small businesses declined in 2012 from $139.5 billion to $138.2 billion..
But you should still fully investigate this avenue. The SBA has actually stepped up some of its capitalization programs this year – particularly for veterans. The SBA offers financing through participating banks for entrepreneurs wanting to start or expand a business. Their guaranteed loan programs involve a good deal of paperwork, because the government is assuring the lender that they will repay the debt if you default. Everything from basic business loans to veteran loans, disaster loans, and special purpose loans are available. Learn more at the SBA.gov website.
 Tracy Kellaher, “Five Things Business Owners Expect from their Bank,” Entrepreneur, June 12, 2013. http://www.entrepreneur.com/money/finance/.
 Julian Hill, “How to Finance a Business,” Entrepreneur, October 21, 2013, http://www.entrepreneur.com/article/229459.
REGISTERED EVE BUSINESS MENTORS
- Robert A. Haynes, Accountant & Serial Entrepreneur
- Jim Lozano, Accountant and CFO for Hire
- Craig Fluty, Technology Staffing Solutions & HR
CAPITAL REGION BANKING RESOURCES
- Small Business Development Center
- Tech Valley Financial Incentives
- Tech Valley Financial Institutions
- Tech Valley Venture Capital Companies
- Upstate Ventures Association of NY (UVANY)
- New York Angel Investors
- Eastern New York Angels