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Financing

© Bert Markgraf

While not all small businesses require outside financing, many do require machinery, office equipment, stock or just financing while their biggest account gets around to paying, three months late or, worse, doesn't pay at all because it's gone under. So you head on down to your friendly neighbourhood bank and tell them you need some money. You see the bank manager who's your buddy from high school, you were best man at his wedding, he writes you a cheque on the spot and tells you to come back and sign some papers whenever you have the time. Right - you wish.

Even if you still have a neighbourhood bank, friendly went out the window when the ATM's arrived and, instead of the guy you went to school with, you'll see a loan officer who has the ten rules regarding small business lending on a scroll in a secret drawer. They are:

don't lend to visible minorities;

don't lend to women;

don't lend to a guy who doesn't wear socks;

don't lend to service industries;

don't lend to a guy who talks funny;

don't lend to anyone with facial hair;

don't lend to anyone with long hair;

don't lend to anyone you don't like;

don't lend to anyone you really like;

don't make loans on odd-numbered days of the month when the moon is waning.

Not too many small businesses easily get bank loans. But you can improve your chances by studying up on what loan officers look for. Entrepreneurial Edge magazine tells you what your borrowing potential might be, how to determine it, and how to convince the bank. What you may find, of course, is that you haven't got much borrowing potential. In that case, back to Enterpreneurial Edge, but this time to the article on Venture Capital. If you have a good concept and a good team, you can still get some money.

Finally, try to get twice what you think you might need or, plan to spend half of what you get - even with the best planning, expenses just seem to keep cropping up.

The copyright of the article Financing in Small Business is owned by Bert Markgraf. Permission to republish Financing in print or online must be granted by the author in writing.