Tuesday, March 25, 2014

Looking for a loan? Five benefits of working with an SBDC advisor before you apply.

We hope you are aware of the various services offered by the SBDC in Spokane, Washington state and across the nation.  SBDC Advisors offer confidential, no-fee business advising services for small business owners in most industries from detailed financial analysis and preparing a loan package to marketing and personnel issues.

Working with an SBDC advisor can help better prepare business owners in putting together a loan application, buying or selling a business or expanding an existing business.  Advisors can also review start-up business plans, walk a business owner through cash flow projections or conduct a basic (non-certified) business valuation. 

Here are five advantages business owners reap from working with a professional business advisor:

1.  Education.
Our goal is to prepare clients for any possible questions the loan officer may pose and ensure that you have everything together before you meet with a loan officer to put forth a complete application.  We also are aware of regional resources available that may assist clients such as classes, conferences and other events.

Ratio analysis sample
2.  Cash Flow Projections and Assumptions
Advisors work one-on-one to go through assumptions, cash flow projections and financial statements.   We work with the clients using a variety of tools and spreadsheets that show assumptions, 3 year cash flow, income statement, balance sheet and ratios.  We use estimates from the clients based on actual figures if available.  We do not provide the data for the financials. 

3.  Global Financial Analysis
In many cases, a business owner may not fully understand the balance sheet or ratios. Performing a global analysis can take a closer look at A/R, Inventory turns, and other key ratios that factor in to a loan proposal.  

4.  Preparation
Business advisors may spend hours with a client to thoroughly review a business plan, work together on assumptions and cash flow projections, and more to help them prepare to meet with their lender.  We provide a checklist of items they should start gathering such as a personal financial statement or tax returns and we also explain the various SBA and other loan programs.

5.  Objective Third Party Review
In some cases, business customers are not ready or prepared to apply for a loan.  SBDC advisors work with clients to assess business readiness, educate them on the loan process and requirements and work with them to present a well structured and complete loan package that fits with a bank's criteria.  

It is a win-win for advisors and business owners.  Clients get the benefit of our tools and experience in putting loan packages together and we want to see our clients succeed, grow and be fully prepared to present the best loan application that they can put forward.