By Rich Russakoff rich@bottomlineconsultants.com
It was the week of September 15 and we were a week away from presenting a loan package for a 2 million dollar company to 8 banks. Suddenly we found ourselves in a perfect storm. Major financial institutions were collapsing. Fear, uncertainty, and questionable assets on the books of banks, was causing credit to dry up faster than a drop of water in the Sahara.
We decided to move forward; we were confident that we had a fundamentally sound loan, a profitable company, and a great story to tell. And we had done our homework and had a great package to present.
As we made our presentations it became clear that the larger banks we spoke with were frozen in their tracks. We were stunned when GE Capital called us and canceled the day of our appointment, saying they were not making loans for the rest of the year. I
t was the smaller banks, the community banks that focused on the small business market that were the most interested and extremely aggressive. All four of our offers came from banks that fit this profile. These loan officers’ were more than order takers. They were real players in the decision making process. In each case they only needed one other person to approve the loan.
The loans had two components. One was a line of credit tied to receivables and the other was a long-term consolidation loan collateralized by a second on a commercial property.
Every offer was contingent on an SBA guarantee for the long-term loan. It was clear that without an SBA guarantee none of these banks could make the loan.
If you are looking for business loans now or in the near future. Consider establishing relationships with smaller more aggressive banks and stay current on what programs state, local, and particularly the federal government will be offering to stimulate lending to the small business market. This is likely to be winning combination for the near future.
There is no question that new stimulus programs are on the horizon within the next year.
Now is the time to expand your network of banks and start following the money.
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