Looking for a Loan? Be prepared to answer these 6 questions

Small business owners need to be organized when looking for a loan.  Irv Williamson,  a SCORE counselor, has put together a presentation for our Get Financing Workshop .   As part of that presentation, he  suggests that you be prepared to answer these 6 questions.

• What size loan do you require?
• How will you use the money?
• How will the loan benefit your business?
• When and how will you pay back the loan?
• How are you a good credit risk?
• What if the business fails or  you cannot repay the loan?

For more information on the workshop, please click on this link:

http://bit.ly/GetFinancing

Why Lenders want a business owner to share in the risk

This is a copy of a weekly posting done in conjunction with Crain’s Chicago Business.

Ask Score: Why lenders want to share risk Posted by Ann D. at 8/26/2009 6:00 AM CDT It’s a question that Score Chicago advisers hear often in their small-business workshops: “Why does the bank expect me as the owner to come up with most of the money to start my business?” Quite simply, the bank wants to make sure that you have significant skin in the game. That’s the view of Frantz Osse, a Score Chicago counselor and former vice-president at Wells Fargo Bank. Mr. Osse reminds would-be entrepreneurs that their suppliers, partners and family investors are putting money at risk. They expect the business owner also to put money into the venture.  In fact, he cites this as a factor in the recent meltdown in the residential mortgage market: Many homeowners with no skin in the game could just walk away from the house, leaving the bank holding the bag.   Similarly, lenders like to see that small-business borrowers are willing to commit their own capital to a startup.  You can learn more about the lender’s perspective in this 25-minute video interview with Mr. Osse.

Update on Stimulus Plan (ARRA)

Program that will provide an update on the Stimulus Plan on September 15 from 3:30 to 5:30 in the afternoon.

The Obama Stimulus plan has been part of the public record since February of this year. The plan has created expectations among small business. Receive an overview of the plan as passed in February;. Get updated from the SBA on current activity; hear from an executive in the construction business on how his company is taking advantage of the plan. Learn how you can work with a construction management company to participate in this opportunity.

Receive an update from Alfred Belluomini of the SBA and get insights from Kevin Ferguson of Kwame Building Group, A Construction Management Company.  Kwame is a company focused on providing services to state, local and municipal entitities

Click here for Registration information.

Below is a video excerpt from an interview done in February with Alfred Belluomini of the SBA.

Know your Credit Score before you Talk to a Bank

Knowing your credit score before you talk to your bank can save you significant time and consternation.  In this excerpt from a CANTV inteview that we did with Meghan Kearns from Harris Bank, Meghan emphasizes the importance of a credit score.   She also relates a couple of examples where she worked with clients to recognize inconsistencies that held up the loan process.

Meghan will be our guest on CANTV 21 Hotline show tonight at 6:30.  If you live in the City of Chicago, please watch it live.  If not,  you can check it out on our BLIP.TV channel http://scorechicagocantv21.blip.tv/ in a couple of weeks.

Buying a Business – Think about Seller Financing

This is an excerptfrom a Blog Posting By Domenic Rinaldi.  Domenic will be presenting “Buying a Businesss” Workshop at score on July 30th.   Information about the workshop is at http://bit.ly/BuyBusiness

…… The good news is that business acquisitions are possible without the government and banks. In fact, there was a time when banks played a minor role, if any, in small business acquisition lending. So, we now see the market retraining itself on the practice of SELLER FINANCING. In essence, the seller fulfills the role the banks have played, and in the process, gains back control of their goals. For obvious reasons, this form of financing is met with trepidation by sellers. However, with the proper guidance from seasoned advisors, these types of transactions can be more lucrative and provide better security for both sellers and buyers.

One recent transaction will serve to illustrate the need for sellers to embrace the idea of seller financing. We confidentially represented a business services firm in the Chicago area that had a 17-year track record, a stable client base and growing revenues. Our firm attracted multiple buyers and secured an offer from a private investor with solid financials. The deal structure was as follows:

50% – Buyer Down Payment
25% – Seller Note
25% – Bank Note

This business had physical (hard) assets on the balance sheet that exceeded the amount being requested in bank financing. The sellers had a long-standing banking relationship and offered to introduce the buyer to their banker, who was very bullish on this deal. The bank loan was difficult to get…..

The buyers and sellers were undeterred and we renegotiated the deal with the buyers. We increased their down payment and thus had the sellers fill the void left by the bank.

This type of financing requires tons of creative thinking, experienced advisors and motivated buyers and sellers.

Biz Broker Journal is at: http://www.bizbrokerjournal.com

Is it Smart To Buy a Franchise Now?

4 Questions about Franchising

1. What is a franchise?

It is a license to use a business system that someone else has developed.  There are over 3100 different franchises.  The best franchises have powerful business systems that can manage, and even thrive in tough times.

2.  How can I know which franchise is good for me?

Is the franchise providing a product or service that is NEEDED?  Your business should be relevant in a thriving economy, or a tight one like we are experiencing now.  If the franchise has been around awhile, the brand recognition can really help bring business to you. Also, if they have strong systems and support in place, this can really help you get your business up and running.

Equally important,  you have to know yourself:  who are you, what can you do in terms of skills and abilities, what do you want (your business goals), how much capital do you have to invest, how soon do you want to be in business, and how does your spouse (if you are married) feel about this adventure?

3.   How are the franchisees doing?

This is the critical question! Ask current franchisees how their business has changed since the economy has changed. Do they see a difference in revenue? Have they had to change the way they run their business? How are they reacting to the slowdown?

How is the franchisor’s office supporting franchisees through this time? If the franchisees have been affected by the current financial trends in the US, what is the franchisor doing to help them survive? Some franchisors have reduced royalties or offered special promotions to try and increase business at the franchisee level. Find out if the corporate office is trying to come up with ideas to help until this downturn has reversed.

4. Does the franchise system offer financing, or does the franchise have arrangements with financing sources?

Some franchisors offer financing to qualified candidates. This can help get the money you need if banks are not willing to lend to you right now.

Additional insights are available at our workshop on Franchising on Tuesday June 30.  More information on this Franchising Workshop

SCORE Chicago back on CANTV 21 Starting In July

Our popular Cable Access show on CANTV 21 will be starting again on July 7th. We will be on Tuesdays at 6:30 in July, August and September.

This show captures current issues and concepts for small business. Below is an excerpt from one of our shows last March that is posted on YouTube.

We have over 30 postings. A complete list of excerpts can be found at:

http://www.youtube.com/user/ScoreChicagoVideo

New Small Business Resources on SCOREChicago.org

SCORE Chicago has added resource pages to its website to give small business owners and startups links that our counselors think will be most helpful.

Here is a table of the new links for you to check out:

Accounting Business Loans Business Plans Buying a Business Cash Flow Chicago Resources Credit eCommerce Financial Statements Financing Franchising

Global Trade Grants International Trade Internet Marketing Inventions Licensing Loans Local Chicago Resources Marketing and Selling Marketing Online New Product

Online MarketingQuickBooks Start a Business Tax Technology Website Creation and Design

Latest Talking Points for the SBA Recovery Act

At a meeting for counselors of SCORE Chicago, the SBA’s District Information Officer, Mark Ferguson, passed out a handout he had just received entitled “Recovery Act Overview.” The reverse side of the document is about “Understanding the SBA Programs in the Recovery Act.”

Here’s the link to the SBA’s Recovery Act Overview.

The consensus was that small business owners should look for loans at community banks and through the SBA’s Microloan program, at ACCION Chicago (and online ACCION nationally).  Regulations to implement some of these programs, including the micro lending program, are still being written.

SCORE counselors can counsel you in person in Chicago or counsel by email to help you obtain a loan for your business.

- Peg Corwin

April 8th – Your Business Can Survive and Thrive: Learn to Position Yourself in Today’s Credit Environment

James Stoynoff, Synthesis Solutions LLC

If you are a small business owner, you won’t want to miss SCORE Chicago’s April 8th morning program entitled “Your Business Can Survive and Thrive: Learn to Position Yourself in Today’s Credit Environment.”  Representatives of SBA and National City Bank will also speak.

This special program addresses how the credit crunch is affecting small businesses and provides actionable steps you can use to meet lending criteria under the tighter new rules of the road. If you seek an increase in credit or are having difficulties with your present borrowing relationship, this workshop is for you.

The April 8th morning program will cover:

• Difficult issues which are challenging small business owners today
• Actions you can take to meet the challenges of the credit crunch
• What the SBA is doing to assist qualifying small businesses
• Steps you need to take to qualify for an SBA guaranteed loan
• What banks want to know
• How does the bank decide to make a loan
• What to bring to the bank
• What to look for in a bank(er)
• What are non-bank lenders looking for from borrowers

April 8th Agenda:

7:30 AM       Registration / Networking / Refreshments
8:00 AM      Program Begins
9:30 AM      Program Ends

Speakers:

James Stoynoff, Synthesis Solutions LLC and SCORE Counselor
Peter Kim, National City Bank, loan officer
Mark Ferguson, SBA, out reach specialist

Registration Fee: $15

Don’t miss this one-time event to help you position your business in today’s credit environment.   For more information or to register, click here.