Dollars and sense: what small business owners need to know about finance.

Author:Miranov, Aaron

Pastures haven't been so pleasant lately, according to small business owners. Over 70 percent of them view the U.S. economy as getting worse, while over 50 percent have consistently rated the economy as "poor" each month since January '08. What gives? Well, unfortunately, it is a healthy (or rather unhealthy) dose of a multitude of factors: the struggling housing market, higher gas prices and energy costs and a shrinking job market that has created a crippling trickle-down effect. This doesn't sound too good.


So many small business owners are wondering how to find capital in a tough economy. The underlying answer from the professionals? Any way they can! Lenders today are more reluctant than ever to provide loans to upstarts. The U.S. Small Business Administration (SBA) offers programs for a less down payment and working capital. "SBA guarantees 50 to 85 percent of the bank's credit exposure depending on the program," says Thomas Zernick, head of SBA lending, Citizens Bank. "As small businesses visit with their bank, it is important for them to come well-prepared when asking for a commercial loan. They need to do their homework," said Zernick.

Gary Gilgen, senior financial advisor for the Rehmann Group, concurs. "Small business owners must explore all options when showing profits to banks to get deals."

Mike Semanco, from Hennessey Capital, says small business owners are being forced to look at other options. "It may be best networking within the right groups and business climate while obtaining advice through trusted advisors," Semanco said. Semanco suggests taking a good look at asset-based lending to meet the various cash flow needs of the business.

There are various modes of creativity for entrepreneurs to attain capital. Before the ball can even start to roll, he or she must fully understand the needs of the business. The idea of borrowing from family members can be equally as viable as constructing a creative partnership between clients and suppliers to find capital. Violet Gintsis, first vice president, Level One Bank suggests a partnership between the business owner and a banker. "Creative ways of finance are driven by good relationships." Gintsis continued, "The best scenario is to have a banker who is a consultant, who can recommend various finance options. It requires an experienced banker who has a vested interest in the local economy and businesses operating in his or her marketplace."

Plan Now, Retire...

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