In a time when obtaining financing is anything but easy, David Leonard, senior area manager for the U.S. Small Business Administration, offered this advice to small business owners:
"You have to understand who has a taste for what you want to do," he said. "What we can do is list three or four banks that have a taste for what you want to do."
Leonard was one of several speakers at the Carson Valley Chamber of Commerce's Business Bootcamp at the Holiday Inn Express on Friday. About 30 people attended the event.
"The chamber has a lot of functions," Executive Director Bill Chernock said. "But there's another component where we want to be more active in giving tools to our members, giving them a chance to be more successful as business people."
Janet Andraski of Nevada State Bank said the recession has made lending extremely difficult.
"It's easy to say all of us are under a lot of pressure," she said. "The lending industry especially is. We've lost a few banks in Nevada, and we might lose a few more. We too are suffering to make up losses from bad loans."
Andraski said small businesses with minimal borrowings are likely to make it through.
"Customers highly leveraged we can't help," she said. "We're still in business to lend, but you need some equity, some collateral and personal liquidity. We can't reinvent the wheel. We're not venture capitalists. We can't take huge risks. Cash flow is king. All we can look at is historically what you repay. If we can't see cash flow, we can't make loans."
Susan Potter of City National Bank said there are other options besides conventional loans.
"SBA financing is huge for those who are highly leveraged," she said. "There is help for those who can't get conventional loans."
Leonard agreed, saying alternative lending programs are booming as less and less people qualify for conventional loans.
"You'll need a declined letter from a bank in order to apply " that is the underlying premise of some of these smaller loan programs, like the Nevada Microenterprise Initiative, or the Rural Nevada Development Corporation," Leonard said. "With the Community Reinvestment Act, banks give money to other organizations that relend it."
Leonard said the Small Business Administration guarantees loans through both alternative and traditional lenders.
"Our rates are a little above conventional loans because there is more risk," he said. "You should meet with local representatives from a counseling group. The counselors will ask, 'Do you have a plan? Are you viable?' In the South, where I'm from, we call it a 'come to Jesus' meeting. If you're already in the death throes, then it's about how to make it less painful."
Leonard said the key to securing any loan is a solid business plan, demonstrating not only historical viability, but future viability.
"The key is how much money you need, and what you're going to use it for," he said.
Andraski said the Small Business Administration is more than a last resort
"We use the SBA as a partner," she said. "It's not a last resort, but an extension of us."
"My job is to facilitate and get you to the right spot," Leonard added. "There are ways to do it and to figure out where you fit in the system."
David Leonard, senior area manager,
U.S. Small Business Administration
(775) 827-4923
David.Leonard@sba.gov.
SCORE, Service Corps of Retired Executives,
Northern Nevada Chapter No. 415
(775) 784-4436
info@score-reno.org.
The Nevada Small Business Development Center
(775) 784-1717
www.nsbdc.org.
Nevada Microenterprise Initiative
(775) 324-1812
www.4microbiz.org.
The Rural Nevada Development Corporation
(775) 883-4413
www.rndcnv.org.
Nevada Commission on Economic Development
Procurement Outreach Program
(775) 687-1813
www.expand2Nevada.com
