Issue link: http://cp.revolio.com/i/142672
finance your vision "How to find the money to finance an expansion or acquisition is the last thing that many business owners think about when they plan a project," says James G. Marshall, vice president, Fulton Bank of Lancaster, Pennsylvania. "It's best to have a team lined up behind you when you begin to plan a major financial move—and your bank should be a member of that team." How should you prepare for a meeting with a bank loan officer? Marshall suggests you come armed with: • ccountant-prepared A financial projections and cash flow analysis. • inancial statements for F your existing practice. • nformation on the background I and experience of owner(s). • arketing feasibility M study for the project. • opies of leases, bills, or C other financial commitments the bank needs. "With this information," Marshall says, "the bank can give proper consideration to your loan application. If you're thinking about acquiring a competitor, it's important to have a clear understanding of the value of every asset in your acquisition target. Banks or commercial lenders are more likely to look favorably on a deal that has already been inventoried and valued by individual asset. Before going to a lender, you should count, confirm, and value every single hard asset you are able to identify, including all operating equipment, furniture, and fixtures. Attention to detail will emphasize your knowledge of what the assets of the target business are worth in the market and why someone should lend you the money to buy those assets. What Happens When Banks Say No? When your best efforts fall on deaf ears at your local banks, all is not lost. Following are some alternate sources of business financing that may meet your needs. State programs. Most states have loan programs designed to provide small business financing. "Some of these programs provide loans at lower than market interest rates, provided the business will create jobs in the state," says Donna A. Holmes, director of the Small Business Development Center, Pennsylvania State University. "Some state programs will take a subordinate position to the bank, giving the bank a better collateral position and an incentive to make a loan that they may have otherwise rejected." For information on small business financing programs in your state, contact the office of your state representative or state senator. Federal programs. The federal government also has loan programs available to assist small business owners. The most popular of these is the Small Business Administration's (SBA) guaranteed loan program that guarantees as much as 80 percent of the loan principal. "This program gives your bank an incentive to lend to a borrower who does not otherwise meet the bank's lending guidelines," Holmes says. Among other SBA loan programs available to small business owners is the 504 loan. Established in 1980, the 504 Loan Program provides long-term, fixed-rate financing for real estate, facilities construction or expansion, or other fixed-asset needs. If you decide to seek an SBA loan, your best bet is to work through a certified or preferred lender. The SBA's guaranteed loan process is rather complex, so you want a lender who has experience working with them. To find certified or preferred lenders, visit the SBA website or call your local SBA office for guidance. The SBA has local and regional offices in every state. You'll find their phone number in the federal government section of your local phone directory. Or, for detailed information on all SBA programs, visit www.sba.gov. Small business investors. Small business investment companies (SBICs) are private investment firms licensed by the SBA to provide investment financing and long-term loans to small businesses. Some SBICs make only equity loans, others provide debt loans, and some provide both. As a rule, SBICs will require the same level of collateral and credit ratings as banks.