If you still haven't formed a relationship with your very
own friendly neighborhood banker, then you'd better run--not
walk--to that bank and make yourself known. Otherwise, you could
really be missing out: When it comes time to get that important
loan, a friendly working relationship with your banker may be your
biggest advantage.
That's the word from Jere Glover, chief counsel for the
SBA's Office of Advocacy, who shared with us results from the
office's "Micro-Business-Friendly Banks in the United
States 1999 Edition" report. The thing that stands out most
about this sixth annual survey of loans of $100,000 or less, says
Glover, is that although business lending as a whole has continued
an upward climb, the rate of actual dollar amount lent to
entrepreneurs has slowed. "This is not [as bad as it seems]
for business," he says, "because we've had rather
robust growth through the years [3, 4 and 5 percent]. But now,
[with this year's 2.5 percent increase], it's not growing
as fast."
Also, the survey's data doesn't indicate how many
companies actually tried to get microloans. Consequently, Glover
says it's difficult to determine if this decrease portends a
looming credit crunch.
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On the positive side, the number of banks lending across state
lines in 1999 increased over 1998. Glover attributes that growth in
part to aggressive marketing campaigns by big institutions like
Wells Fargo, the bank- merger phenomenon and the growth in online
lending.
But there's a darker side beyond the silver lining, because
these out-of-state institutions tend to make credit-card or
credit-scored loans in the $7,000 to $20,000 range, but keep in
mind, these loans typically carry a higher price tag. Says Glover,
"[These banks] are making lending decisions based on a fairly
limited bit of information (your credit history), which means that
if business owners aren't very careful to make sure their
credit histories are good, they're going to be squeezed out of
this market into a 'no bank's land.'"
This is exactly the kind of situation where it pays to have a
relationship with your community banker, says Glover. These
institutions weigh more factors when making lending decisions,
which bodes better for the average borrower.
The bottom line: The lending landscape hasn't changed much
for entrepreneurs. If you've got good credit and don't want
a lot of money, loans are easier to obtain. However, if your credit
has blemishes, it's going to take some careful digging and
evaluating to find the cash you need, and it sure doesn't hurt
to be on a first-name basis with your local banker. So check out
the top-rated microlenders that follow. Even if they aren't
located in a community near you, it might still pay to give them a
try.
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