A weekly look at Wyoming business questions from the Wyoming Small Business Development
Center, part of WyomingEntrepreneur.Biz a collection of business assistance programs
at the University of Wyoming.
By Bruce Morse, WSBDC Region 2 director
"I hear so much in the media about banks not lending money. Can a small business person still borrow money these days?" Kelly, Ten Sleep
The bankers I have talked to around Wyoming all say they still have money to lend, but they do admit that they are being a little more diligent in their underwriting approach.
This generally is not a result of being burned recently because most of them were more conservative to begin with than their national brethren, but their regulators have insisted they become a little more cautious. I did have one lender tell me his organization would look only at business loans to companies that have been established for at least two years -- in other words, no start-up ventures.
I feel that a solid loan request that makes sense and can show repayment ability will still be met with a favorable reception. After all, that is how banks make money -- by loaning it out and getting it back with interest.
Keep in mind bankers will be looking for several things in that request. One, does cash flow with the new debt being requested? Two, is the collateral to secure the debt adequate? Three, does the owner have a fair amount of his or her own equity in the deal (existing or start-up)? Four, does the owner have the ability to manage this business?
While every lender looks at these items slightly differently, they will evaluate them all. Another trend that may appear is for lenders to seek a guarantee more frequently to help mitigate some of their risk. This could be through the Small Business Administration, U.S. Department of Agriculture, Wyoming Business Council or other agency.
I suggest that applicants present a well-written, professional-looking request to the lender. Since this usually does not happen, the business owner will gain credibility immediately.
For assistance with preparing a business plan or a thorough loan application package, contact a local Small Business Development Center office for guidance. Contact information is available at www.wyomingentrepreneur.biz.
For an opportunity to post comments on this article, go to the www.wyomingentrepreneur.biz Web site, enter the blog site.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, e-mail wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY 82071-3922. Additional help is available at the WSBDC Web page at www.wyomingentrepreneur.biz.
Posted on Monday, January 26, 2009
