The Road Most Traveled
You've looked at all the underrated, less obvious ways to get business capital, but what about the most obvious: business loans. Think you can't get one? You'd be surprised. Don't know how to do it? Try learning. You'll need numbers and advice. And you can start with this: We decided to see just how many of Entrepreneur's Hot 100 got started with just bank loans. We also ferreted out the secret behind the success of their business financing and asked a few of them some pointed questions. Here are some numbers:
- 44 percent of respondents got their loans in less than one month-one in just a week.
- An overwhelming majority (88 percent) got traditional, non-SBA-guaranteed loans.
- Most (66.5 percent) only went to one bank, which happened to be either local (33 percent) or regional (44 percent).
- Seventy-seven percent of the entrepreneurs didn't have a business relationship with the bank prior to the loan, but 55 percent had previously known the banker.
- Eighty-eight percent describe their credit as good prior to applying for the loan. While the amount and type of collateral used to obtain the loan ranged from second mortgages to securities, a surprising 22 percent didn't have to offer any collateral at all.
- Tired of numbers and ready to go after a loan of your own? We asked some of the Hot 100 business owners who secured loans for their advice:
- Be prepared and know your industry, advises Gary Selph of Atlanta-based Commercial Carpet Specialists. "I got my loan instantly due to several factors. I already knew the banker. I also had a comprehensive business plan, which was easier for me to write because of my background in the industry." Robert Moomjy of Rug and Home Inc. in Gaffrey, South Carolina, agrees. "We had a very viable business plan based on two people who had been in the industry. Suppliers knew us and had respect for us."
- "When you approach bankers, do it as if you're giving them a ground-floor opportunity to be your business associate," suggests Robert E. Hunter of Leading Edge Air Logistics in Morristown, Tennessee. "Telling bankers you need money scares them to death."
- Rob Paladino of the Atlanta, Georgia, wholesale lighting company Distribution Partners Ltd., attributes his success to speaking clearly and confidently about his company vision. "Speak openly about the risk and contingencies for overcoming it," adds Paladino.