obtaining capital

 
 

When looking for outside financing, start with your current bank or credit union. Why? Because you already have an established relationship with them; your bank or credit union already knows you, your business, and your account history.

Also, check out 3CORE, your local business development lender serving Butte, Glenn, and Tehama counties. 3CORE can help you figure out your options when you can’t get all your financing from a local bank or credit union.  3CORE specializes in business loans $25,000 - $250,000 for expanding creditworthy companies.

Be prepared before meeting with any financial institution. Lenders will ask you why do you need the loan, how much financing will you need, what will the loan funds be used for, how do you plan to repay the loan, how much of your own money will you be investing in the project (don’t expect 100% bank financing), how much and what type of collateral will be used to secure the loan, what does your credit report look like, explain any discrepancies on your credit report, etc.; be prepared with a response to each question and be confident. Be honest and upfront.  

Have a business plan, including financial projections, ready to share with lender(s). Have personal and business financial statements (last 3-5 years) and tax returns (last 3-5 years) easily accessible.

FEDERAL SOURCES

SBA does not make direct loans to entrepreneurs to start or grow a business. Instead, it provides a guarantee to banks and lenders for the money they lend to small businesses owners. This guarantee protects the lenders interests by promising to pay a portion of the loan back if the business owner defaults on the loan. So when a business applies for a SBA loan, it is actually applying for a commercial loan through a bank or authorized SBA lender, structured according to SBA requirements with an SBA guarantee. Essentially, SBA loans alleviate the risk associated with lending money to business owners and entrepreneurs who may not qualify for traditional loans.

Other sources of funding to start or grow your business: borrow from family and friends; bring on a business partner; work with a private lender; alternative financing sources such as fintech business financing, peer-to-peer (P2P) loans, crowdfunding, etc.; credit cards. Do your homework and research each option thoroughly; there are benefits and costs with each.     

Be VERY CAREFUL with online platforms and credit cards as you don’t have a relationship with these funders and, if an unexpected event happens whereby business cash flow is impacted, they generally will not have a way to work through it with you.  Look carefully at terms when considering non-regulated lending options, which generally carry high rates of interest and accelerated repayment terms.  A lot of businesses may be adversely affected by online platforms that offer easy and quick ways to access capital.