Whether your business needs operating capital or a new piece of equipment, financing can play an important role in achieving your company’s goals. This is why the Flint & Genesee Chamber is teaming up with ELGA Credit Union to offer the Financing Your Business workshop on April 24.
In advance of the upcoming workshop, Inside Business spoke with Shane Hunter, commercial services manager at ELGA Credit Union, to get a sense of what financial institutions are looking for when it comes to small business loans.
What should a business owner or entrepreneur know before reaching out to a potential lender?
A loan prospect should be able to answer questions that revolve around the five C’s of credit:
- Capacity – the ability to repay the loan
- Capital – how much has been personally invested in the business
- Collateral – what secures the loan
- Conditions – the intended purpose of the loan and if it fits the community in which they serve
- Character– what’s the reputation of the business owner and the business owner itself? Do they pay their bills?
Are there any C’s that people struggle with more than others?
For a newer business starting out, probably capital and collateral. They have the time invested, but they don’t have a lot of their own resources involved. In that case, we ask, “How can we get them on a solid foundation so they’re better able to borrow money?”
Have you noticed any common misconceptions about the financing process?
I think loan prospects come in thinking that there’s a million hoops to jump through, that the answer is already no before there’s been any discussion. That’s not the case.
Also, not everyone knows that there’s government funding that can help get businesses off the ground. For example, SBA guarantees allow banks and credit unions to potentially take more risk than they would without a guarantee from another entity.
What’s your key piece of advice for a business seeking financing?
Come prepared. A lot of people come in with a great idea, but they haven’t given a lot of thought to things like cost or competition. If you have a business plan that states what you’re doing, how you’re going to do it and how much money you’re going to make, it helps things move a little quicker. It gives the bank or credit union something to build on.
Interested in learning more about financing a business? Save your seat for the April 24 workshop here.
To learn more about the financial-themed workshops offered this year, click here.