Do you need money?

If you are a small or family owned business looking for short term borrowing for inventory, a capital purchase, cover payroll, buy a computer (or several computers), a vehicle or even a line of credit, be of good cheer. Money is here! Really. Let me give you some suggestions.
1. If you truly need it short term, your bank's rates should be the lowest right now. Many banks are not, really, lenders for long term items. However, if you are just wanting to borrow because your A/R is not yet due or slow or you want to meet payroll and anticipate other cash needs simultaneous to payroll needs, then go to your bank. Especially, if you have a long term relationship with them. Make sure you tell your banker in advance you might need the money and make sure your financials are up to date if he might need them. If you have a strained relationship with your bank, it is important to let them know you might need money and ask them to let you know if they will do it or not. If they will not, try credit companies like GE Credit, ITT Credit, Barclay's Credit or even the SBA in combination with your bank.
2. If you do not have a banker or bank, get one now. Get someone to recommend a bank or go to one where you have personally banked for a long time. When you approach them, just have a meeting where you talk about your business, what you need to borrow and why and when. If they will generally consider doing the loan, ask them what they will need. Probably, current business and personal financial statements, 2 years tax returns and, if you are going to use A/R or Inventory as collateral, they will need your A/R Aging Report and your Inventory Stock Status Report or your Fixed Asset Inventory Report. Remember, if your A/R shows huge amounts of customers over 60 days (unless you have government contracts to back them up), your lender will likely only loan based on current balances so figure in your loan needs what you will need beyond just what you need now and attempt to get an open credit line for the difference.
3. I have had several clients and know several people who feel that it is none of the banks business about their personal information or tax returns. Too bad! You are the one wanting to borrow the money. If you are a very strong company, have no debt and enough Receivables to cover the loan, oh let's say, 5 to 1, then maybe you won't have to do it. That is a big maybe because banks must have all the information to meet the criteria for bank examiners and keep their FDIC insurance in tact. Usually your personal guarantee is "additional" collateral. The bank will use whatever assets you wish to pledge first and then use your personal statement to shore up the deal in case of a default.
4. If the assets you want to pledge are "free and clear", then you MIGHT have an argument for not personally guaranteeing. However, the bank should request and receive from you your personal statement so that they can see how you have valued your interest in the company and does it appear that you might be using some of the borrowed money personally. If you have no previous relationship with the bank, they will want more than that. Remember, they do know you from Adam, so be transparent. (Not like the governments transparency which is really defined as you be transparent we will be secretive.) Also remember, if you have had your checking account and even savings at the bank for years and even if you have pretty substantial balances, that does not mean as much as it used to. Also, if you run a lot of checks and deposits through the bank, that does not mean what it used to. Banks, if they are new to your, will want your accounts, but they are not going to loan you money just because you do a lot of demand deposit account business alone with them. That is why, you should build a relationship with the bank and a specific banker far in advance of needing money.

In my experience, banks are NOT always the best choice. Over the next couple of days, I will discuss some others. It has been said that your bank is a good lender if you do not need the money. They brag about being "Business" lenders and in truth they are just not really good business people they are just good paper pushers because all banks have their own criteria for making loans and bankers have little or no flexibility in their lending. HOWEVER, if you have a relationship with the bank, you are much more likely to get them to consider something that is creative PROVIDED your banker has any guts. Most of the bankers I have known do not have a creative bone in their body, but a good one will listen to what you propose, get all his paperwork together and, at least, present it to the loan committee for action. If the loan is small enough (like a vehicle or a copier) he may have credit authority within those limits without going to committee. MAYBE.

That is my experience. More on other lenders is coming. What do you think?