March 28, 2024

Growing Your Business

Financing

Venture Capital | Self Financing | Commercial Loans | Special Interest Financing | Florida-Based Loan Programs | Crowdfunding | Grants

| 4/21/2016

HOW BANKERS LOOK AT BORROWERS
5 Key Points

Bank loans are a common way to fund a small business, but actually getting one can be difficult. Before making a loan request, consider how bankers evaluate eligibility and adjust your game plan accordingly:

A banker wants to know up front that you’ll be able to repay your loan, so come to your first meeting armed with proof: a written analysis of anticipated cash flow and a description of collateral that could be used as a secondary repayment source.

Obtain a free copy of your credit report at www.annualcreditreport.com and look it over carefully for mistakes and potential “red flags” before meeting with a banker. A missed payment or a period of bad credit due to a medical crisis or other life-altering event won’t necessarily disqualify you from obtaining a loan; attaching a written explanation of the situation to your credit report might help your case.

Equity can be built through retained earnings or the injection of cash from owners/investors. Banks typically like to see that the total liabilities of a business are no more than four times the amount of equity. Don’t assume you can obtain a loan to cover 100% of your financing needs; you will have to put some of your own money into this venture too.

Defined as personal and business assets that can be sold to pay back the loan if necessary. If you are just starting out and have no collateral, you will probably need a co-signer who does.

Bankers do not look fondly on loan applicants who want to open businesses for which they have no experience, unless they can demonstrate that they intend to hire people who know the business or take on a partner with appropriate experience. If you do not have personal experience, get some. Before you apply for funding, work in the business and take entrepreneurial training classes.

 

Special Interest Financing

Targeted Opportunities

If you are black, Hispanic, a female or a U.S. veteran, your business may be eligible for the following specialized funding programs and services.

The Black Business Loan Program provides loans, loan guarantees and/or investments through loan administrators to black business enterprises that cannot otherwise obtain capital through conventional lending institutions. For additional information and applications, visit www.floridajobs.org/BBLP. In addition, Black Business Investment Corporations throughout Florida stand ready to facilitate access to capital for black business owners. See the list of BBIC offices in Florida. Hispanic business owners may find funding information pertinent to their needs through the Hispanic Business Initiative Fund Florida at www.HBIFFlorida.org.

WOMEN No government loan programs exist exclusively for women business owners; however, experience has shown that SBA loans are three to five times more likely to go to women than non-SBA loans. SBA financing options include 7(a) and CDC/504 loans as well as microloans for small-scale financing. On the local level, Women’s Business Centers (WBCs), which are overseen by SBA’s Office of Women’s Business Ownership, can provide assistance in applying for SBA loans and also may provide access to alternative capital financing programs. See a list of WBCs in Florida.

VETERANS Thanks to the VA’s Office of Small & Disadvantaged Business Utilization, a wealth of information on small business financing specifically geared to veterans is just a click away. The Veteran Entrepreneur Portal (VEP) makes it easy for veterans to access federal services and best-practices information about starting, growing and funding a business. For more information, visit www.va.gov/osdbu/entrepreneur/index.asp. And if that’s not enough, the SBA website has a whole section devoted to business resources for veteran entrepreneurs at www.sba.gov/content/veteran-service-disabled-veteran-owned.

 

Enterprise Florida: Financial Support

Helping Small Businesses Grow

Enterprise Florida Inc. (EFI) partners with lenders and other outside organizations to help small businesses access capital through the following programs:

Through the SSBCI Program, small businesses may obtain loan approvals and leverage private capital to cover startup costs; franchise fees; expenses related to working capital needs, business procurement, equipment and inventory; and the purchase of owner-occupied real estate. SSBCI provides lenders with necessary security in the form of a partial guarantee to approve a loan or line of credit.

The EFI-managed Florida Development Finance Corporation was created to be a conduit issuer of industrial revenue bonds (IRBs) for small manufacturers and 501(c)(3) organizations. Proceeds may be used for capital expenditures only, such as the purchase of land, new long-term equipment and building construction/renovations.

The Florida Opportunity Fund provides venture capital for startup and early-stage businesses in two forms: a state-run venture capital fund, which may include other, private investors, that invests directly in businesses; and a fund of funds that invests in other venture capital funds that, in turn, invest in individual businesses. The state’s decision on which form to use depends on many factors, including resources and available talent.

Helps Florida’s small businesses improve their chances of submitting a successful Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) Phase 1 proposal for federal research and development funds; may be used to cover market research, technology consulting services, grant writing assistance, related travel and legal/accounting fees.

Tags: Florida Small Business, Ways to Grow Your Business

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