If approval rates are at record highs, why are businesses still struggling to be approved for small business loans? It’s usually for two reasons. First, there is a significant amount of fear of banks. It’s not surprising. Bank speak can be intimidating. The second reason is less than stellar credit history. These two problems can combine to create small business growth issues.
Today, we will look at a second example of how ProStrategix helped people get loans. Unlike yesterday’s protagonist, Phil, today we will look at Amy and how she dealt with her light fear of dealing with bankers. Recent interest rate decline means that now is a great time for loan approval rates, especially if you can qualify for a good one. And that’s how we got involved with Amy.
Amy operates a small, but highly profitable salon. Amy built her business for a two-chair beauty salon with 4 stylists, and now she oversees a 5-chair salon with even more stylists. In those 4 years, Amy’s business has nearly tripled. She had built a very successful formula and brand at this location and had outgrown her space. When we met, she was considering expansion. But, she wasn’t 100% sure exactly how best to go about that kind of growth.
Amy was cautious with her spending, being careful with getting capital. While she was an amazing businesswoman with phenomenal intuitive business skills, she didn’t have any formal business training. So, “banking stuff” took her out of her comfort zone.
Numbers and bank-speak were intimidating to her. She is a bright woman. She just did have the formal training so it’s only natural to feel a bit out of place when bankers are speaking in jargon you don’t understand. All professionals speak in code. It’s not intentional. It’s just how they were taught. After using it so much, they forget that it’s not the way most people speak. Even when confronted and confused by other professional jargon, they fail to recognize it. A doctor is likely as confused by bank-speak as a banker is by doctor speak.
Unlike many of her peers, her training wasn’t as costly so we student loan debt wasn’t crushing. In fact, she had nearly all of it paid off. Her personal debt was low, and she had excellent credit. In addition, she has a successful track record. These are just the type of businesses the SBA program was designed to help.
With a loan debt load and excellent credit score, we knew the smaller banks would be more than happy to help her get over her fear of banks. We just needed to get her application and business plan in order so we could streamline the process and get her the capital she needed relatively quickly. The SBA loan process is slow, so the better prepared you are, the faster it will go. Plus, her capital needs were modest <$100K to open another studio.
Amy was approved on her first try. The SBA backed ½ of the loan, which meant that Amy only had to guarantee ½ of the cost of the loan, which is a much lower burden on the businesses. We applied in June, and she had funds in August, which is almost record time. Amy’s bank fear has all but disappeared ever since.
Brian Cairns, CEO of Prostrategix Consulting. Over 25 years of business experience as a corporate executive, entrepreneur, and small business owner. For more information, please visit my LinkedIn profile