Because of the economic downturn and well-documented credit crisis of recent years, there remains a perception that credit is not available for many businesses. As one who has worked in the lending business more than a quarter of a century, I can assure you that nothing could be further from the truth. Credit is available to help businesses grow. In the beginning of 2011, we at Capitol National Bank announced our own aggressive lending goals to assist business growth and expansion in the Greater Lansing area.

Even though there are more regulatory requirements in place today than ever before, a smart plan will greatly increase the likelihood of securing that needed loan for your business.

The U.S. Small Business Administration (SBA) suggests a four-step approach to the loan process. First, is to specifically identify your financial needs. Ask yourself: What is the purpose of my loan? How much capital do I need? What is the state of my industry?  How do my capital needs align with my business plan?

SBA loans are a great option for many small businesses, as they offer lower down payment requirements and the ability to spread financing over a longer period of time. You’ll want to determine if you qualify for a SBA loan program and then investigate several SBA products to find the one that is right for you (www.sba.gov).

The SBA 7(a) Loan Guaranty Program is one of the primary SBA lending programs. It provides loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The SBA 504 Loan Program provides growing businesses with long-term financing for purchases of fixed assets, such as buildings and heavy equipment. Eligible businesses include small and medium-sized companies where the financing will help them create and/or retain jobs for the local community. Eligible for-profit business entities must have a net worth of less than $15 million and net income of $5 million or less. This product is jointly funded with the bank and a certified development corporation (CDC), with the bank providing 50 percent of the project funding and the CDC up to 40 percent.

There are several other SBA products that may apply to your business including the SBA Express Program which is a streamlined program designed to provide access to financing for small business, and the Patriot Express Pilot Loan Program, which is a product for the military and features enhanced guarantee and interest rate characteristics.

The next step in the loan process is to select a lender. You should view your lender as a critical part of your management team. Consider your lender as a partner who is interested in sharing in your success. The more you can do to help your lender understand your business, the greater the probability of obtaining a small business loan.

The final step in the loan process is to properly prepare for the meeting with your lender. As a minimum, you’ll need to bring tax returns for the past three years, your business plan and cash flow projections.

A well-structured business plan, a decent credit score, along with having an established history are all things that will help increase your chances of receiving a loan. The ability to show the lender goals along with financial predictions is necessary. Just as developing a solid business plan is essential to any successful venture, developing a strategic approach to securing credit through good planning and preparation will enhance your likelihood of success.

		David Feldpausch is senior vice president, small business lending for Capitol National Bank.