Where Can Chicago Startups and Entrepreneurs Get Loans Today?

dollarWe all knew the credit crisis was going to affect small business lending, and now we now see the evidence.  Here’s the latest from the SBA, angel investors, microlenders and banks in the Chicago area.

SBA Loans in the Illinois Area

SBA Backed Loans Dry Up screams the Wall Street Journal headline.  Business Loans Endangered, says Entrepreneur.com.   I checked in with Steve Konkle, Economic Development Specialist at the Illinois District SBA office to get the regional view.  He says that the total number of loans is dropping in Illinois, “but in the last few months, the average size of a loan backed by the SBA’s 7(a) program has increased significantly.”  Bottom line: existing businesses are getting more financing than startups.  Stay up on the facts:  current press releases from the SBA. See especially, New Ways for Small Business to Access Capital.

The Angel Pipeline

Don’t look to angels unless your business plan is recession-proof. Ron Kirschner, M.D.,  President of Heartland Angels, cautions entrepreneurs that “Considering our macroeconomic environment, more companies with revenue models relying on advertising as opposed to the direct sale of a product are not likely to find investors knocking at their door. The ones with products or services that are recession proof or are positioned to grow in the upcoming environment are more likely to be considered more seriously by private investors (and any other entity with money!).”

Microlenders

According to Susan Spector, at the microlender ACCIONChicago, “we have money to lend.”  They’ve seen a huge boom in business, she confides.  They offer loans over prime which now start at 11% interest.  For startups, they lend $15,000 and for existing businesses, up to $25,000.  Apply online at this link.

Community Banks not Big Banks

Konkle, who is a liaison between banks and the SBA, also sees a trend to more lending by community banks. This is confirmed in the Journal‘s Small Firms Get Local Loans and an article from Florida Small Businesses Go to Community Banks for Loans.

I have many bankers calling SCORE Chicago, stating that they are still lending!  The truth however is a bit more nuanced.  Yes, it is important to note that banks still want to lend.  However, risk managers are now ascendant and have the power…and the responsibility…to make sure problem loans do not increase.

Remember that banks need to raise equity when loan defaults increase, and increasing they are.  As a result:

  • Banks are raising the level of credit scores for new applicants.
  • They spend more time looking for collateral they can turn to IF the loan defaults.
  • They really don’t want “story” loans that have to be explained, e.g. my payments are late because….

So small businesses need help when they apply to make sure their business plans are solid and their stories, credible and clear.  SCORE Chicago can help.  Make a free confidential appointment with a counselor at one of our 15 Chicago area locations today.

More on Financing?

5 Keys to A Successful Loan Application My post on this blog

Top SBA Lenders, from Crain”s Chicago Crains Chicago Business

Finding a Small Business Bank Loan Fox Business

Business Plan page SCORE Chicago website

See Peg Corwin’s recent Delicious bookmarks on loans and financing.

Larry Pelka

Late arriving comment from a banker: “At National City Bank, we are still lending,” says Jason Chess.  “Most banks have recently seen their lending dry up, but our Small Business Banking division is truly “business as usual” right now.  One major change recently is the minimum credit score required to obtain financing.  Of course it depends on the deal, but a typical borrow really needs to have a credit score of about 700 or higher.  Our minimum desired credit score was 680 a few months ago.”

SCORE Chicago is a nonprofit organization and resource partner of the Small Business Administration.  Volunteer experts offer free email counseling on business plans, loans, marketing etc., for startups and small businesses.  Click here to submit your email counseling request.

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3 Responses to “Where Can Chicago Startups and Entrepreneurs Get Loans Today?”

  1. Dorothy Gray Says:

    I am seeking a loan,so that i may advance my small business. I have done lot’s of research in my line of business. My finding is that if you have a good product that really work. It can be very luvrative, but i need financing.

    Thank You
    Dorothy Gray
    Product Developer

  2. Peg Corwin Says:

    How about coming in to meet with a counselor to discuss your financing needs? You can sign up online at one of our 15 locations at
    https://www.securedata-trans5.com/ap/score/index.php?page=10

    or call 312-353-7724 for an appointment at our downtown.

  3. Getting a Loan For Your Small Business: Why Banks Want You To Invest When They Loan « Learned At SCORE Chicago Says:

    […] economic times, SCORE counselors Mark Goodman and Frank Osse discuss the ins and outs of getting a loan for your startup or small business.  Osse headed the private mortage banking group at Wells Fargo.  He also worked for […]


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