Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with Ami Kassar @akassar. Ami is CEO and Founder of MultiFunding, and a nationally renowned small business advocate and leader. He’s committed to ensuring that small business owners have the best possible access to the capital they need to help grow and manage their businesses. He has developed a national reputation for confronting and challenging the largest banks in America for their lending records to small businesses. He’s assembled research reports that have become a critical component of the national debate about small business lending. For more information check out www.multifunding.com
SmallBizLady: What are the top three things you need to do if you want to secure funding for your small business?
Ami Kassar: It’s always smart to put yourself in the lender’s shoes. Would you lend yourself the money? Applying for a loan is like applying for a job. For a job you would work on a perfect resume. On a loan you will need a perfect application. You need to understand your financials. Also, are you ready to put up your house for collateral? If you’re not, then maybe you don’t believe enough in your business.
SmallBizLady: How realistic is it to seek investors for a small business start-up?
Ami Kassar: Investors are different than lenders. They get excited about a business becoming big. With investors you need to sell them on your vision and your experience. It’s much more realistic to get funding for a start-up if you think in stages. What’s the first thing that you need to prove, and how much money will you need to do it.
SmallBizLady: Are there any grants one can obtain to fund their small business?
Ami Kassar: There are some grants available. Generally these are local. A good thing to do is to reach out to the local Small Business Development Center in your community and ask for guidance.
SmallBizLady: What is the most common mistake small business owners make when pursuing funding?
Ami Kassar: A common mistake is to try and borrow or raise more money than you really need. Figure out how much you really need to get to the next step, and pursue that. Also, get a focused list of borrowers or lenders and work systematically. Learn from your declines so you can apply them to the next situation. And, never give up.
SmallBizLady: Can you secure funding for a small business if you have poor credit?
Ami Kassar: You can. If you’re in a business-to-business type of business and you have receivables, the lender can use these as collateral and will be more concerned about the credit quality of your customers’ than your credit quality. Also, sometimes SBA lenders will make exceptions for poor credit. There are also alternative loans available that will be less concerned about personal credit scores.
SmallBizLady: How long does it typically take to secure funding for a small business?
Ami Kassar: There are no rules. Some alternative loans can close in a matter of days and some SBA loans can take months to close. Finding investors can be a quick process if you’re lucky but it is usually a long and protracted process.
SmallBizLady: Are loans the way to go or are there alternatives to securing financing for a small business?
Ami Kassar: There are plenty of alternative lending programs available other than traditional loans. These usually come with much higher price tags. It’s always smart to check the traditional loan programs and the SBA first to see if you’re eligible.
SmallBizLady: Have banks gotten any better since 2008 in lending to small businesses?
Ami Kassar: There is some indication that banks are getting a bit better – but it’s still very tough. Usually, the smaller community banks are a better shot. It’s always smart to check out www.bankinggrades.com to find a small-business friendly bank in your community.
SmallBizLady: What are the key things funders are looking for when making a lending decision?
Ami Kassar: Lenders look at cash flow, credit, and collateral in evaluating their credit decisions. It’s important to understand how you fare in all of these areas.
SmallBizLady: Is the SBA a valuable resource when searching for financing?
Ami Kassar: Absolutely. But remember, the SBA is not the lender. Banks lend with an SBA guarantee. So, if one SBA lender rejects you it doesn’t mean that you’re out. It’s always smart to try at least three SBA lenders.
SmallBizLady: What is the best advice you can give someone who is at the idea stage of a business and thinks they need funding?
Ami Kassar: Push yourself really hard to think about how much money you will really need. Look for ways to test your concept that require the least amount of outside money to get going.
SmallBizLady: If you are an existing business in search of expansion dollars, what are the best financing options to consider?
Ami Kassar: Usually a working line of credit is a great way to help you with your growth.
For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.