How to Get a Loan

Written by Mary Welch Monday, November 23 2009

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If you are seeking a loan for your small business, perhaps you should go out and buy a bunch of hoops.

Why? Because you’ll be jumping through a lot of them before you can actually get a loan.

Regardless, it is possible to get a loan these days, especially if you are already in business. “Things are beginning to loosen up, but things will still be tight over the next 12 to 18 months,” says Terri L. Denison, district director of the Georgia office of the Small Business Administration. “The borrower must make sure that everything she is asking for is absolutely necessary to run and grow that business and that she is operating as tightly as possible. Lenders are looking at how efficiently a company is operating now more than ever. Cash flow is very important.”

The Georgia office is one of the nation’s top producers in terms of the volume of SBA-guaranteed loans to small businesses. In fiscal year 2008, it approved 2,218 loans totaling more than $671 million for Georgia small businesses through its 7(a) and 504 loan programs.

Contrary to popular belief, the SBA does not directly lend money. It guarantees a percentage of the money to the bank that actually does the lending. In that way, it lessens the bank’s risk, which helps open the bank’s pocketbook.

Karen Rosenberg, senior vice president of retail and business banking for Cincinnati-based Fifth Third Bank, believes that requirements for loan applications are “pretty much the same as they have been historically. The major difference today is that banks are much more careful that they have the complete documentation before moving the request forward. In years past, a handshake or nod was taken at face value without requiring further documentation.”

Jean Holloway, executive vice president of Bank of North Georgia, says that loans are still being made despite the harsh economic times. “There are a lot of businesspeople out there who are using a host of excuses as to why they didn’t qualify for a loan,” she says. “It’s a great topic of conversation. But the fact is – and always was – that it’s difficult to find money to start a business and it’s difficult to get money if you don’t have any personal assets to pledge as collateral. A lot of people who are being turned down would have been turned down a few years ago.”