Do you make it a practice of giving money to strangers? If you have a few bucks to spare, then chances are you'd give them to someone know. Now ask yourself before you head in for a small-business loan: How well does your banker know you?"Your banker needs to have an understanding of you in good times and bad times," said Greg Clarkson, executive vice president of BBVA Compass Bank, during a session called "Strengthening Small Businesses In a Challenging Economy," here at the National Small Business Week conference in Washington, D.C. "We look at underlying factors, but if we don't know you, then we have to look more at statistical information."
That means your credit score, which some small-business owners in attendance said doesn't accurately portray them given the credit crunch. One attendee expressed concerned about the impact even one missed loan payment could have on the credit score of a "well-meaning entrepreneur." Clarkson's fellow panelists seconded his emotion about the importance of establishing a rapport with the people at your financial institution. "We look at relationships aside from credit scores," agreed Kenan Pankau, vice president and SBA manager at the Randolph Brooks Fed Credit Union. (Side note: Earlier in the day both Clarkson and Pankau received 2009 Small Business Lender of the Year awards, the former for the large category, the latter for the small.)
|(l. to r.) SBA's Eric Zarnikow, Randolph Brooks' Kenan Pankau, SBA's Judith Rousell, Visa's Raghav Lal, and BBVA's Greg Clarkson.|
Another tip before making a beeline to a lender: Be prepared, which means don't bring in a business plan scribbled on the back of a napkin, Pankau said. Added Clarkson: "We want to be sure that we understand your product and that you can move it forward with a reasonable expectation of [loan] repayment. Come prepared with historical information and your vision."
As for finding those lenders in the first place, Eric Zarnikow, the SBA's associate administrator for capital access, had another simple suggestion: "Shop around for banks and credit unions," he said. "Check with other similar businesses in your community and get referrals."
Also, put your local Small Business Development Center (SBDC) and SCORE chapter to work for you. That's precisely why they're there, though panel attendees and members, alike, agreed these resources would better benefit the small-business community if pumped with a bit more marketing muscle. In fact, Judith Roussel, the SBA's district director in Illinois, made the point -- news to many -- that SBA district offices and resource partners (including Women's Business Centers and Veterans Business Outreach Centers) are located throughout the country.
Another resource: the Visa Business Network on Facebook, which represents a collaboration between Visa and SCORE, according to Raghav Lal, head of Visa's global small business. From managing cash flow to understanding your funding options, the network offers a host of tools that help entrepreneurs better run their businesses, he said.