Last month, we met Rosemary F. Gozdowski, an ultrasound
clinic owner in Sylvania, Ohio, who's endured more than her
share of missteps and misfortunes in her loan history. Despite
initially having strong credit and collateral, Gozdowski has been
turned down by countless banks and small-business investment
corporations. Although Gozdowski successfully secured a $50,000
loan, she failed to negotiate for longer terms, which would have
made her payments more manageable. Later, she hooked up with a
different bank that was subsequently put under a cease-and-desist
order by federal regulators.
Doug Hood of Rainmaker Capital Corp., a former banker who now
owns a loan-packaging and business-coaching service, reviewed
Sylvania Ultrasound Institute & Men's Health Center's
situation and said he'd only heard of one case worse than
Gozdowski's in his 18 years of lending. What went
wrong?
Cynthia E. Griffin:Why is Gozdowski, who is
cash-strapped but obviously growing, getting no interest from
banks?
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Doug Hood: If she were throwing off profits, it might be
different. But there's not enough collateral to warrant a
banker taking that risk.
Griffin:What about her company's steady growth?
Don't bankers consider that a good sign?
Hood: They probably do, but it takes a lot to go from
losses to sustainable growth. What she's doing is good, but
until she does a lot better, they're not going to take the
risk.
Part of the problem here is that not many companies do what
Gozdowski does. And that's the third leg of the [financial]
stool: a lender's experience working with an industry. Any time
bankers don't understand something, they tend to be
con-servative or say no.
Griffin:Gozdowski went to Town Bank, whose officers
convinced her to get an equipment loan and a line of credit through
them rather than get an in-house lease from the equipment
manufacturer. Soon after, she learned of the bank's
cease-and-desist order. What complications arose from this?
Hood: Because the [loan and line of credit] tied up all
her assets, it's now impossible for her to find someone to make
a debt loan. Also, when a bank merges or your loan officer changes,
the new people just might not want to do your type of loan
anymore.
Griffin:Are there times when an entrepreneur should
decline a bank loan offer?
Hood: Yes. If you went into a bank for a line of credit,
and the banker said "Instead, I'll give you a term loan
and you can put it in the bank and pay interest," this
situation is not to your advantage. You'd be paying interest on
money you're not using.
The problem is, most entrepreneurs don't know what to ask
for. There's no training program [for obtaining loans].
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