By George M. Dawson
I need $7,500 for my desktop publishing business. Where do I get a small, small business loan?
It depends on your personal credit record, the age of your business, and your business income and available collateral.
Not a problem if you have an excellent personal credit history, a two-year business history, and the ability to make loan payments from your present income and use a car for collateral. You fit within the qualification margins for a short-term bank loan. Call it a personal loan, not a business loan, and set it up with your credit union.
However, if your credit record isn't so hot, plus you have a newer, break-even business that needs new customer revenue to make the payments, then you drop off the bank's page. Now your best chance is a community-based microlending organization. Most have an underlying goal: to help the businesses banks won't.
Some microlenders use SBA funds, so your local SBA district office can point you in the right direction. (Call 800-8-ASK-SBA.) Locate other, privately funded microlenders through your university-based Small Business/Minority Business Development Center. (Your local SBA office can help you find these, too, or call local universities.) Or try local government economic development agencies or grass-roots community action groups.
And, of course, there are your personal credit cards. (A footnote: You did apply for several new cards before you quit your full-time job, didn't you?) There's nothing more important in small-business borrowing than your personal credit report. That's why credit cards are my last choice--card issuers are quick to report problems.
Order your credit report every year--and always order it before applying for a loan or lease. Clean up the errors and have good justifications for any black or gray marks.
Compass International Services Inc., (212) 967-7770
George M. Dawson (firstname.lastname@example.org) is a small-business consultant and author of Borrowing To Build Your Business: Getting Your Banker to Say "Yes" (Upstart Publishing, $16.95, 800-235-8866). E-mail him your questions at email@example.com
Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker.