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Small Change While the number of approved microloans is up 25 percent, it's still not easy to get money-but it's not impossible. Let these entrepreneurs share their true stories.

By Charlotte Mulhern

Opinions expressed by Entrepreneur contributors are their own.

Getting a loan is sometimes harder than you think.
The company: International Musical Suppliers Inc.
Owner: Lisa Argiris
Founded: 1986
1997 sales: $3.5 million
1998 projections: $4 million
Loan specs: $1.5 million from Citibank

So you've got everything going for you: a strong track record,excellent management skills, a compelling business plan, andconcrete goals for the future. Securing a loan-even from a bankknown for being conservative-should be a piece of cake, right? Notexactly.

As Lisa Argiris learned when her original lender was unwilling tosupply the additional capital she needed to start her Chicago-basedmail order musical instruments company, banks don't alwaysshare your confidence in your business. Argiris contacted 10 banksduring her search for a loan earlier this year, but despite hercompany's impeccable credentials, she had trouble finding afinancial institution willing to approve a loan on her terms.

"All the banks were interested in me," says Argiris, 34,but the sticking point was the structure of the deal. "Thebanks were astonishingly poor at offering me what I needed and werelooking instead at what they were comfortable doing." Somebanks considered the amount requested too steep; others refused tooffer competitive interest rates. But instead of settling for less,Argiris held out for more.

Good thinking. In the end, her company's assets andprofitability impressed Citibank-she got everything she wanted fromher inventory, mortgage and working capital loan. But the finaldeal came only after 16 weeks of searching.

What was the problem? For one, Argiris says banks have "cookiecutter" mentalities; most she approached use narrow formulaslike debt-to-equity ratios to screen applicants, showing littleinterest in what her business really provided, its growth potentialand its actual funding needs. Second, her company needed a lot ofinitial capital to produce income.

Argiris learned a lot from the experience. She recommends having aclear understanding of your needs before approaching a loanofficer. "If you don't understand that," she says,"you might be persuaded to do things that aren't in yourbest interest but are in the interest of the bank, which can bedevastating to your business."

A Loan At Last

The struggle behind one entrepreneur's executive housingloan.

The company: Corporate Suites at Lakeside LLC
Owner: Vickie Snavely
Founded: 1998
Loan specs: $550,000 from Bank of Floyd (in Floyd,Virginia); $399,000 from the SBA

Are business loans hard to come by? It depends on whom you ask.Vickie Snavely, for one, describes her recent loan search as"a nightmare." That's not what you'd expect froman entrepreneur who's run three successful businesses (ahousehold amenities rental company, a window treatments businessand a property management firm) for more than a decade.

But sometimes when you're new to the lending game, thingsdon't turn out the way you expect them to. Snavely had neverpreviously required loans of this magnitude to support herbusinesses. Then she decided to launch a fourth venture, a Salem,Virginia-based extended-stay facility (for travelers who needlodging for a longer period of time than the typical hotel stay butnot long enough to warrant leasing an apartment). Since the projectinvolved real estate and construction, she knew she couldn'tmove forward without an advance of nearly $1 million.

Snavely had a plan: She was sure if she sought financing from eightbanks and 12 nonbank lenders, one would work out. Unfortunately,her strategy didn't account for discrimination or sexualharassment-obstacles she encountered that threatened her chances ofgetting a loan. She says one bank representative actually said hewouldn't work with a woman; another lost his job after he madea series of inappropriate comments to Snavely. During her two-yearsearch, it seemed everyone she turned to considered her requestsunreasonable. "This process has reaffirmed my opinion thatit's still a man's world out there," she says.

In late 1997, Snavely looked to her local Small BusinessDevelopment Center (SBDC) for help, and things finally startedlooking up. After landing partial financing from the SBA throughVirginia Asset Financing Corp., Bank of Floyd in Floyd, Virginia,decided to provide the balance of her loan request. As for thefinal 15 percent of the necessary capital, Snavely was able torefinance some property to squeeze out the additional funds.

While Snavely is happy with the loan package, it still bothers herthat she encountered so many serious obstacles in her search forfunding. She's convinced, however, that persistence pays off;without it, she wouldn't have been able to move forward on thislatest venture.

To entrepreneurs traversing the same path, Snavely recommendsseeking help from local SBDCs as a first step, not as a lastresort. She credits her eventual success to a rock-solid businessplan, more than a decade of industry experience, an extensivecustomer base that provided letters of intent, and a reliableaccountant.

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