Guest, Allen Weaver, advisor to the Small Business Development Center, specializes in access to capital and loan packaging. Allen has helped countless businesses in northeast Ohio obtain financing both with his work for the SBDC, and as a commercial lender.
Allen provides insight into how the loan process works and how your business can tap into those resources more easily.
Transcript of Biz Chat Ohio’s podcast 1.4: Allen Weaver
Welcome to Biz Chat Ohio, the podcast bringing you big ideas for small businesses. I am so excited about today’s show, and I hope you are too. Because throughout this series, we hope to bring the best of small business news and industry trends from Ohio thought leaders, and just maybe give you a little something that will help you run your business better.
I’m your host, Cathy Walsh, director of the Small Business Development Center at Lakeland Community College, and I’m joined by my co-host and soul sister, Gretchen Skok-DiSanto, director of Lakeland Community College’s Entrepreneurship Center, and also a business advisor for the Ohio Small Business Development Center. Gretchen, how are you doing today?
I’m doing great. How about you, Cathy?
Oh, good. Good. It’s a great day.
Good, good. So, you know, I think, Cathy, you and I can both agree that the top issue that keeps small business owners up at night is money. And it even keeps me up at night, and I’m not a small business owner. So money, money, money, OK? We’re always worrying about it. Even the wealthy worry about it, OK?
So having to borrow money can bring additional anxiety to small business owners if they’re already in that stressful situation of trying to make sure that they’re running their businesses in the best way possible. So when we work with clients, we often find that they aren’t aware of how the loan process works or what information a bank is going to ask them for.
And I’m also consistently dumbfounded that they don’t realize there’s folks like us at the Small Business Development Center that can help them with that, and help them get ready before they even approach that bank. So a big– or actually the reason we’re talking today with our speaker is that he’s going to help us shed some lights on these important topics that small business owners definitely need to understand.
Yeah, thanks. Because today we are joined by our own colleague, Allen Weaver. Allen is an advisor with Gretchen and me at the Small Business Development Center, and he specializes in access to capital and loan packaging. Allen has helped countless businesses in Northeast Ohio obtain financing, both with his work for the SBDC and as a commercial lender. So we’re really delighted that we get to pick his brain today and share some of his insight into how the loan process works, and how your business can tap into those resources more easily. So Allen, welcome to Biz Chat Ohio. Gretchen and I are so glad to have you with us today.
Well, thanks, Cathy and Gretchen, for inviting me today to talk about how we can– how I can help small business owners find needed financing for their businesses. So after 40 years in the banking industry, most of which was spent as a business lender, I joined the SBDC team as a business advisor specializing in assisting business owners with the process of getting prepared, getting ready to approach lenders for their needed financing, and successfully getting that needed financing.
What’s cool is for so many years I sat behind a desk interviewing business owners, reviewing their loan request, reading their business plans, and analyzing their financial information to determine, one, could I loan them money to this business. And two, what type of business financing would be the best solution for their particular need or situation? Now I’m on the other side of the fence and have that inside knowledge of what a banker looks for, which I can share to help a business owner get better prepared before applying for that loan.
Excellent. So, you know–
I’ve got a question. Drawing on all those years of experience as a banker, Allen, what should a business owner know about dealing with a bank? So basically, what are your top tips– three or five tips, whatever it might be, that you absolutely have to know going in before you talk to that bank?
Well, contrary to popular belief, banks do make loans to more than just businesses or people who don’t really need to borrow. I mean, I used to hear that a lot when I was still in banking. But you’ve got to remember the banks cannot survive without making loans. The banking industry is very competitive, and individual bankers have loan goals to hit each year. So the banks and bankers are very much– need and want to make loans, and they want to make good loans.
So you need to keep in mind that the banking industry also is very heavily regulated by the federal government. And in order to make sure the bank is making sound loan decisions and following regulatory guidelines, they have loan policies in place set by management that dictate which loan requests get approved and under what conditions.
For example, these loan policies and guidelines hopefully avoid approving a loan request for a business that may not have the capacity to repay that loan, or maybe it’s the wrong type of loan or a loan structure. So a loan default, for example, it can be just disastrous for a business and is bad for the bank and its stockholders.
I say all of this– the tip, perhaps, is just knowing the banking system– how the banking system works can you give you a leg up on obtaining the appropriate financing you need in your long-term financial success and stability.
Allen, can you elaborate a little bit about building a relationship with your bank, especially in this day of electronic banking? Because so many people don’t even go into the bank anymore on a regular basis. How does a business owner build a relationship with their bank?
That’s an excellent question, Cathy. I do want to make a quick comment about electronic banking. And it’s a great tool for times– it’s a time saver for day-to-day banking. You can make deposits, transfer money, pay bills. You can apply for, say, a car loan or home loans or credit cards. All of these services are very generic, cookie-cutter type products and services.
But business lending, however, is anything but cookie-cutter or generic. Each business is different. Each business financial needs are different. Each business sales cycle and structures are different. And with that said, each business loan request needs to be analyzed to determine what is the cause of that financial need. And once that’s identified, the appropriate financing can be structured and put in place.
There really is not a one size fits all in business banking. That cannot be done electronically. So you will find that most bankers will want to meet you in person, see your business facility if you have one– kick the tires, so to speak.
Lending business– lending to a business is more than just making a loan, it’s an investment in your business for the bank, and it should be. And I’ve said meeting with that customer, it builds that relationship, that long-term relationship. Because your business is going to have a life of its own, and it’s going to evolve, it’s going to grow, and you’re going to need to go back to that bank, and hopefully they’ll support you going forward. So you’ve got to build a strong relationship. You can only do that in person.
Oh, amen to that, Allen. I totally agree with that. I’ve got a question, back to my original comments about being stressed out in this– we see that a lot with our small business owners that we talk to. What should– let’s assume some of our listeners today are considering approaching a bank. So that they can lessen that stress level on themselves, what should they start doing today if they need to borrow funds to best prepare themselves?
Well, I think the things I just mentioned, and it’s a good place to start. And knowing how the business banking industry works will provide clear understanding of why bankers do what they do. Now from there, you need to make sure that all of your ducks are in a row before you approach your bank for a loan.
Keep in mind you will need to tell your story to them, so that they have a clear understanding of your business, your product, how you produce your product or service, who you provide that product or service for, how you market your product, and how you manage your business. They’re also going to want to know about your background and your experience.
In addition, the banker will want to see historical financial information on your business. In many cases, will request to see financial projections. And lastly, they’re going to want to know why you’re coming in for the loan. This is where we can assist and guide you in preparing for that banker meeting and loan request.
Allen, could you talk a little bit about your role in the SBDC and how you help work with your clients, either through assistance with loan packaging, educating, finding a loan, [INAUDIBLE].
Yeah. So one of the areas which the SBDC can help and I can help you is in listening to your story– understanding, identify your financial needs, then assisting you in organizing your story, most often into a business plan that will contain all of the elements that the banker will be looking for– all of those things I mentioned a few minutes ago. This all needs to be put together into an easy-to-read business plan format. We can further provide guidance on how to develop your financial projections. And finally, recommend what type of loan or loan program to go after. And in some cases, which lenders to approach.
Hey, you just hit on something, Allen, that stood out to me– projections, OK? That’s– that is a scary word to a lot of people. Can you talk a little bit more on that, and how the SBDC can help with that, and where you start to try to pull all together that information?
Well, a lot of times, depending on the industry, the small business owner may have some knowledge of what they might be able to generate in revenues. They can also kind of look to their competitors to see what they’re charging. We also have tools at the SBDC that provide a key and– key indicators that– what the industry is actually doing, so you can determine if you’re charging enough to make a profit in your business. So we can help you work through all of those issues.
OK. Thanks. I mean, I really do think that’s an incredible service. Because that’s a– it’s just a fear factor for some people, and particularly if you’ve never done it before. So thanks for elaborating on that. I appreciate it.
And I just want to add one last thing to that. And oftentimes, I’ve seen business owners will just pull numbers out of the air. And you really can’t do that. You’ve got to do your research to make sure that those numbers are credible because the banker will spot that right away.
OK. Good point. So I got another question. I love to talk success stories. So do you have one or two success stories that shows how working with the SBDC got a loan application the green light?
Sure. So I have two recent success stories which come to mind, involved one individual who had a dream to buy an existing business, and the other involved three individuals who wanted to start up a new business. In both cases, they had background and experience in their industry fields that they wanted to get into. They had done some research and had some financial information gathered. But in both cases, they were unsure on how to assemble this data, did not know what kind of financing was appropriate or available.
So we went back and forth with fine-tuning their business plans and financial projections. I was able to review their projects from the viewpoint of a banker, and was able to make recommendations and suggestions along the way. And based on their specific projects and the lending industry’s current appetite for specific projects, keeping in mind during COVID most lenders were jittery about lending money, we were able to refer these two groups to lenders who ultimately approved the requests.
So it wasn’t– you know, it’s kind of a back and forth exchange. They will work a little bit on their business plan, their projections. I’ll take a peek at it, make some recommendations. And then we just fine-tune it and get it ready for the banker to take a look at.
OK. I’m sorry, Cathy. I’m asking too many questions.
I’ve got more questions too, so–
We’re going to pick his brain. We told him we were going to pick his brain.
Yeah, sorry. My husband calls me greedy Gretchen.
Are there situations where businesses get turned down by that first bank, but then they find another bank that’s willing to work with them? So basically, I’m asking, can persistence pay off in this type of situation when you’re looking to find money?
Absolutely. Because every bank has a different philosophy. They have a different appetite for different types of loans and different types of industries. So you can’t take it as– take it personal. If they for whatever reason don’t feel that they want to invest into your business, then we just go to the next lender and– or lenders, and tell your story.
Well, and I– I’ll just tag on to that, that I think one of the benefits of working with the SBDC is we can explain that and try to find another lender or maybe some other options for our clients when they run into that because it does happen. I want to– I’d love to say it hardly ever happens, but it happens quite often. So–
Well, even one of the success stories–
And again, just take that fear away. Mm-hmm.
I didn’t mean to interrupt you, Cathy, but even with one of the success stories I just talked about, we actually went to two other lenders before we got the project approved. And it was the third lender.
Wow, perfect. I’m going to– I do have a question here I thought of while we were talking. Can you just touch a little bit on SBA loans? I know there’s a lot of myths running around.
When I was in banking, there was the old, hey, get two turndowns, and you can go to the SBA and apply for a loan. And I still hear that from people calling in. But can you just talk about the SBA’s role in helping small businesses when it comes to borrowing money– what they do and don’t do?
Absolutely. So with all of the clients that I’m working with that are applying or looking for capital, after I’ve reviewed their project, I can pretty much tell if a bank’s going to need to seek SBA’s assistance. Banks will typically try to approve the project conventionally. But if for some reason the project is outside their lending policy, or maybe outside their loan or their risk tolerance, or maybe there’s some insufficient collateral, then there’s government programs that can help mitigate that risk for the bank.
So when we’re reviewing a project, if we feel that there’s SBA assistance needed or some other government program assistance needed, we make sure that really gets baked in and included into their business plan, so that the banker realizes that we were prepared, and we can head– start right from the beginning down that path of needing that additional help. Because there’s a few more things that need to be done and then reviewed with SBA financing. But today it’s streamlined. It’s easy. It’s been put through great programs, and they’ve helped many, many businesses start and many, many businesses grow.
So in order to get that SBA guarantee or assistance with that, I just want to– the borrower, the business, does not go to the SBA. That’s something the banker brings in and handles that piece of it on their behalf.
Yeah. The banker’s the quarterback, and they handle and coordinate that all behind the scenes.
And I’m going to ask you a really easy one. Are there grants out there to start businesses?
Far and few between.
It’s not funny, but it’s probably the most asked question that we get. So I’m going to give it to Allen and see how he answers it.
No, there’s very few, unfortunately.
Very, very few. Very few.
And I would add to that, because my students ask me that about– ask me that all the time. They’re looking for that free money. And yeah, there is a little bit out there. But let me tell you, the competition for the money that is out there is incredible.
Well, and most of it’s for very niche businesses.
IT or technology related.
It’s not for your standard pizza shop or somebody starting a service company, unfortunately, because it would make our job a lot easier if there were those resources.
That’s certainly the truth.
Allen, are there some online resources or some other help that people can go and look for on their own that’s reliable that you would recommend?
Yeah. I oftentimes will steer folks to sba.gov, which has a lot of information on business plan preparation and the different loan programs that are out there. But you can always register with us for counseling and assistance. Our program is an SBA program. There’s no cost, and we’re always available to help one-on-one with your particular project.
So if somebody does want– have a question for you or wants to get a hold of you, what’s the best way for them to do that?
Yeah. The best way is to register through our website. And then I’m easier for you to reach via my email, which is– it’s firstname.lastname@example.org.
I think you were going probably include some of that– some of the contact information.
We’ll put that in our show notes definitely.
That’s great. Yep.
Allen, thanks so much for being with us today. You know, your knowledge of loans and the lending process is certainly something that our clients are taking advantage of as they move through a loan application. And, you know, we’re so happy that you’re part of our team. And we welcome anybody who’s listening to this podcast to request the same assistance that our current clients are receiving.
Because, as you mentioned earlier, Allen, I mean, you’re helping small businesses bring this home. And I think given that wealth of knowledge you have, you’re definitely saving some sleepless nights, you know? Or at least, I should say, keeping our small businesses from not having those sleepless nights because they have somebody they can count on, somebody that’s going to give them honest advice, good advice, that’s– and somebody who’s not going to give up.
I mean, I really appreciate the fact that you helped that one business that was turned down two times, and finally, on the third time, he got that loan. So that speaks a lot to your persistence, which those of you who are listening, if you’re looking for money, you really should take advantage of that expertise.
Yes, I totally agree. Thank you.
Thank you. I appreciate that.
Thank you so much for joining us today, Allen. And we will definitely put your email address, our counseling registration website or links into our show notes. So this was very interesting. Thank you for joining us again, and love to have you back sometime.
This podcast is made possible by the Ohio Small Business Development Center and Lakeland Community College. Stay up to date with the latest podcast episodes by signing up at bizchatohio.com to receive our latest shows and premium content delivered right to your inbox. We are also posting blogs, so please go on to bizchatohio.com and read our blogs and other freebie content.
If you have a business question or an idea for an amazing guest or business topic, you can email us at email@example.com. And if you’d like to learn more about the SBDC at Lakeland, please visit our website at www.lakelandcc.edu/sbdc.
As we mentioned, our center offers no-cost business advising in the areas of business planning, access to capital, marketing, and a host of other topics. So we would love to hear from you. If you’re joining us from outside of Northeast Ohio and you want to find a center closer to you, you can go on to americassbdc.org and find a center anywhere nationwide.
So thanks again for listening. Join us next time for another great episode of Biz Chat Ohio. Thank you.
My pleasure. Thank you.