Smart Hacks To Get Your Small Business Funded

Getting funded is easier than you think!?In this article, I share a simple three step approach to greatly improve the odds of getting funding for your business.

I was prompted to write this article by two recent research findings:

1.??????The Federal Reserve revealed that in the last 12 months, 44% of businesses did not apply for loans to help their businesses because they did not think they would qualify.

2.??????Goldman Sachs and the Bipartisan Policy Center revealed that 48% of Black-owned small businesses will pursue capital in 2022, but only 19% are “very confident” they will succeed.

These findings address why we regularly hear from small businesses in the Houston / South-East Texas area with questions like… “what does it take to get funded?” ... “who do I talk to?” ... “what do I tell them?”.

This article will answer those questions and more.

Step One - SBA’s Resource Partners.?

You know your business, and you know it well.?But do you know how to talk to a lender... how to explain your business and your capital needs in ways that communicate best with them??SBA’s Resource Partners do!??

In the Houston District, we help fund four partner organizations to enable free assistance to your small business.?About 250 advisors, mentors, and counselors are ready to help you pursue the capital that you need.?They are listed below.

Resource Partners will help you develop a funding request proposal (also referred to as a loan package) that will be easily understood by a lender.?It will explain how much money you need and why, when you will spend the money, how you will repay the loan, the source of collateral (though with an SBA guaranteed loan any collateral weaknesses are mitigated) and the effect this loan will have on your business.?Key portions of the funding proposal may include:

• Historical financial results and projections for your business
• Business plan and viability (if a start-up business); Marketing plan if an existing business
• Total project costs and amount to be financed
• 3-year history of personal and business tax returns
• Complete personal financial statement?
• Disclosure and explanation of known derogatory credit issues?

Step Two - Present your funding proposal to lenders.?

I recommend one or all the following three approaches, which are known to yield the best results.?

First, ask your SBA Resource Partner for lenders that might be interested in your proposal. Since they helped you develop your funding proposal, they will be able to identify the most proficient small business lenders that are a fit for your industry and needs.?Targeting the lender is important – not all lenders are interested in all opportunities, regardless of your credit score, business plan or other factors. Plan to interview the lenders, and don’t complete the loan application until you ready to apply for a loan.

The second method is to attend one of SBA Houston’s Lender Matchmaking (Speed Dating for Money) events.?At these events we coordinate 15-minute meetings between small businesses and top-tier small business lenders.?We match the small business and lender based on loan amounts, credit scores, industries, and more.?You should meet several lenders in just a couple of hours, enabling you to find one or more lenders interested in your proposal.?We also hold a virtual version of this event that we call Meet the Lender; in which you will meet with four lenders in small -group sessions at 20-minute intervals.

Finally, you may consider using the SBA’s Lender Match function at www.sba.gov .?After you supply responses to a series of questions (business description, industry, amount needed, how you will spend the money, experience level, and related information) this online tool emails your information to multiple area lenders.?Interested lenders can then respond to you directly.?Since you have already developed a comprehensive funding proposal with your advisor, it can be used to guide the ensuing discussing of your funding needs.

Step Three - Get funded!?

By now you have a well-prepared funding proposal and have had meetings with experienced small business lenders.?The odds of getting funded have increased dramatically!?

In some cases, though – such as especially low credit scores, inability to show that the loan can be repaid, or lack of equity – you may not get funded.?However, you will have developed a more complete understanding of what it takes to get funding, while establishing relationships with experts in small business lending.?You may now work on any shortcomings with your SBA Resource Partner advisor, and once the issues are addressed, return to your lender relationships, and compete the funding process.

As you can see, these three steps can make a big difference to your small business.?Get started with an SBA Resource Partner today so that they can help you prepare, present, and ultimately get funded.?The SBA has already helped pay for them, so their services are completely free to you!?In the Southeast Texas / Houston area, they are:

1. Texas Gulf Coast?Small Business Development Center (SBDC), 713-752-8444, www.sbdc.uh.edu
2. SCORE Houston, 713-487-6565, www.Houston.score.org
3. Greater Houston Women’s Chamber - Women’s Business Center (WBC), 713-782-3777, https://ghwcc.org/entrepreneurs/
4. WBEA Women’s Business Center (WBC), 713-681-9232, www.wbea-Texas.org/womens-business-center

Be sure to connect with my office at the Houston SBA so that you can receive timely information about our events and activities.?Go to www.sba.gov/tx/houston and sign up for our emails.?You may also follow us on Twitter @SBA_Houston.?