Lending: Open again for (small) business

Funding for starting & growing small businesses heats up

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As the housing market and other sectors of the economy see improvement, funding for small businesses is seeing advances as well.

In fiscal year 2014, the SBA Portland District lending reached over $449 million in loans supported small business. The 7(a) loan program saw 781 approved loans, up from 748 in the year prior.

“Lending [for small business] is happening,” said Camron Doss, district director of the Small Business Administration (SBA) covering Oregon and Southwest Washington. “In the greater Portland area, we have seen four consecutive years of growth in business loans.”

Buck Heidrick, a certified business advisor with the Washington Small Business Development Center (SBDC), has seen the same thing.

“This year has been the healthiest climate for business financing since 2008, and in the past six months we’re seeing start-up businesses get bank loans too, which is unusual,” he said.

A couple of factors have played into this resurgence in small business capital. First and foremost is the housing market. Heidrick explained how real estate is intrinsically tied to small business owners being able to secure funding, because their own assets are often a key factor in whether a loan is approved.

Buck Heidrick“As the housing market has improved, those who have been underwater, often to no fault of their own, have emerged,” he said. “They find themselves in a much better financial situation themselves and can now potentially qualify for lending.”

Another factor Heidrick pointed to is the tightness of dollars related to funding businesses in Clark County specifically. As the reluctance to fund here gained public notoriety and even legislative pressure, those tight strings are beginning to loosen up.

“We are seeing banks and credit unions, especially those plugged into the region directly, being the most active in small business lending,” Heidrick said.

Doss shared that the loans being granted cover a broad range of types of businesses.

“From microbreweries, which we have helped quite a few recently, to smaller home-based businesses and nonprofits, we are seeing businesses get the financial support they need to be successful,” he said.

Heidrick agreed that there is no single type of business that is benefitting from small business funding – it’s across the board.

“It’s not just start-ups who need help,” Heidrick said. “Existing businesses struggled through the down turn as well. With good business management and strategic planning, they have been able to succeed as well.”

With the broad range of businesses supported, comes a broad range of solutions.

Camron Doss“We are particularly excited about our microloans program,” Doss said of the SBA’s loans. “We are able to serve the underserved with these small loans which range from $1,000 to $50,000. The loans help reach minority entrepreneurs, freelancers and even home-based businesses.”

With a six-year maximum pay off schedule, these smaller loans are more achievable and manageable for smaller businesses. The average loan for this program is $13,000.

“The real key is small business owners and entrepreneurs looking for help. There are resources out there to help them be successful,” Doss noted. “We want to help companies start, grow and succeed.”

The SBA will help an entrepreneur develop their initial business plan, hone marketing strategies, manage their human resources needs, create employee handbooks, whatever is holding them back from launching or growing.

“We align businesses with the right resource partners to get off the ground, find sources of capital and access markets such as contracting with the federal government,” Doss added.

The SBDC, mutually funded by federal and state dollars, also assists businesses with anything related to their performance and bottom line.

“Anything that touches a business, we will help them with,” Doss explained. “Finances, legal questions, staffing, e-commerce … whatever they need, we are staffed with counselors who have been successful business owners themselves.”

What does an entrepreneur need to bring to the table? A robust business plan with full financials is essential. Both the SBA and the SBDC have tools, counselors and mentors to help business owners create one.

“We have a broad network of resources, like SCORE (Service Corps of Retired Executives) mentors, who themselves, have been successful business owners,” said Doss. The Portland District of the SBA has logged more than 35,000 hours counseling small businesses.

In addition to a solid business plan and tight financials, Heidrick added, “The biggest differentiator I see among businesses that the lenders want to give money to – passion. Everyone has to come in with their business plan, but those entrepreneurs who are passionate about their plan, about their business, they give a bank a lot more confidence that they are going to get paid back. It’s not just pretty financials.”

For businesses that are on the launch pad, need to change direction or are ready for growth, there are resources available to ensure their success.

“Any business that says ‘I don’t know it all’, we can help,” said Doss.