The Center For Debt Management
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The Credit Process: A Guide
For Small Business Owners

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Resources and How to Use Them

There are numerous programs available to assist prospective and existing small business owners. Many are wholly or partially funded by federal or local government entities and can provide services to you at low or no cost. Sometimes staffed by university professors and graduate business students, retired business executives, or small business consulting specialists, these programs are excellent sources of advice. An abbreviated list of resources in your area appears in the Information Guide

Types of Assistance

Small business assistance programs generally fall into two categories: training programs, which teach business owners technical and financial skills, and loan programs, which offer loans or loan guarantees for small businesses.

Training Programs

Depending on the organization and on your particular needs, training programs offer skill—building assistance either in the classroom for several weeks or in individual counseling sessions.

Technical assistance programs can cover a wide range of topics and their applicability depends on the nature of your business. Topics may include production, marketing, distribution, packaging, import/export documentation, and human resources or staff management.

Financial skills assistance programs may include basic accounting, cash flow management, sales projections, feasibility studies, and tax planning.

Business plan development courses include components of both the technical and financial programs and assist you with composing, preparing, and presenting your business plan and loan proposal to prospective lenders.

Loan Programs

Loan programs are among the resources offered by small business investment corporations and state or local development corporations. These programs typically have funds available to lend directly to new or expanding businesses. They also may offer guarantees or other support for a loan given by a traditional lender, such as a bank, to help mitigate the bank's risk of lending directly to a new small business. One advantage of approaching an organization with a loan program rather than a bank is that the organization may have funds dedicated solely to the new small business market. It also may be receiving some type of government subsidy that permits it to offer lower interest rates for small business loans. Programs that provide guarantees from a government agency to pay the loan if your business fails may convince a bank to lend to your business when it otherwise would't.

Small Business Administration

Created in 1953, the Small Business Administration (SBA) provides management and financial assistance to small businesses. Mainly, the SBA guarantees loans through financial institutions. The loans may be used for working capital, machinery and equipment, acquisition of real estate, and expansion.


If Your Application Is Not Approved

If your loan is not approved, ask why. You are entitled by law to a written statement of the reasons for a loan denial, if you request it. Many banks automatically supply the reasons for denial in writing.

Knowing the reasons for a loan denial can inform you of areas in your proposal that didn't meet the lender's standards. Since all lenders do not share identical standards, another lender may reach a different credit decision. Review your loan proposal in light of the lender's comments. See how you can use the resources or ideas presented in this booklet to strengthen your application. Go through the process of reviewing your technical and financial material again, and then review your business plan. Find any areas that could be augmented further and lead to an approval on your next request.


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