Small Business

3 Tips for Landing a Small Business Loan

Matthew and Marnie Brannon, co-owners of Midwest Fiat in Columbus, Ohio borrowed $110,000 earlier this year to help them expand the vintage Italian car parts and service shop they have run for five years. The process took six months of  diligent work, but the Brannons learned some valuable lessons about what it takes for small business owners to beat the odds and get funding during a downturn.

Two of their most important tactics for securing a coveted business expansion loan included making their plight known by publicizing their loan search through the press and other outlets as they were struggling through the process. They also worked on building relationships with potential funders by using contacts within their business network with ties to the banking industry. Combining different tactics helped them eventually attract investors and fulfill their dream of expansion.

Maybe you are a small business owner who was rejected for a loan in the past year; or perhaps you want to approach a lender for the first time; or you may simply have aspirations of launching a new business. Regardless of your loan goals, the following tips can help you achieve the Brannons’ success by navigating the current economic climate and getting the money you need to thrive.

Never stop networking. Join and become active in a couple different types of organizations where you can meet other small business owners and managers who can potentially introduce you to their trusted business advisors, as well as financial organizations. Targeted business organizations or trade groups can help you really fine-tune your focus because they will introduce you to those with financial interest in your industry that might be able to help you with funding. Regardless of the actual organizations you join, make sure they are good fits for your type of business and that you don’t join more than one of each type so you’re not spreading your time too thinly.

Make your funding and expansion plights known. One thing the Brannons learned is that publicizing your search for funding can potentially bring interested parties and potential investors out of the woodwork. According to Laurel Delaney of Small Business Trends, a recession can be a great opportunity for small business owners to attract investors and clients alike because it presents an opportunity for these owners to show they have the “guts to press on, even in the face of insurmountable obstacles” (Small Business Trends). Keeping a public profile can help anyone seeking funding look very attractive to lenders and approach them from a position of great strength.

In the end, building a profitable business is about building key relationships. Ultimately, the products or services you provide to clients or how great you are at your job are not going to make or break your business or increase your chances of being successful at getting a loan, starting or expanding your company. As with marketing your business to potential clients, you need to focus on building relationships with key contacts in industries related to finance that can actually bring you closer to those that can and will give you a loan.

Good times or bad, small businesses must fund their growth if they want to stay healthy and competitive. Continue to build important relationships with other small business owners, stay diligent about networking, and approach those that can help you secure funding from a position of strength.

Tags: loans, Small Business