Real Scenario- When a Growing Small Business Needs Funding

An actual Q&A exchange with a small business owner and finance expert.


Excerpts of a conversation between a small business owner and a financial consultant.

  1. Question, Small business owner: What is the best resource for working capital for business expansion?

Answer, Financial consultant:  A bank.  But I have to tell me more facts so I can determine if your business will qualify. Have you been in business 2 years?

2. Question, Small business owner: Yes. What other conditions will be required to qualify for a working capital loan?

Answer, Financial consultant:  Your personal credit score. You and other shareholders of 20% or more of the company must have personal credit scores that average not less than 680.

3. Question, Small business owner:  Can I provide the bank with my current credit score to avoid a hard pull?

Answer, Financial consultant: Yes, but you must be certain to get a FICO score (Fair Isaac).

They will want to pull your credit as part of the loan process, but you should be certain you qualify under their program before you allow them to pull your credit. A credit pull from a third party reduces your credit score.

4. Question, Small business owner: How shall I start the process?

Answer Financial consultant: Speak with the lending officer at the bank that has your business operating account, but don’t start the process until you are ready.

And make certain that your industry is acceptable to the lending institution. Some lenders like specific industries more than others. You may have to speak with another bank that favors your industry.

5. Question, Small business owner: How can I determine if I am ready?

Answer, Financial consultant:  Do you have current financial information that you can share with the lender?

That would include a current P&L and a balance sheet.  And they will also want to review two years of tax returns; for both the company and the guarantors.

That is the first step. If you do not have the ready access to this information, you are not ready to speak with a banker.

6. Question, Small business owner:  My accountant keeps the records. Will I have to contact him/or her?

Answer, Financial consultant: I hope you also have this financial information available. Your accountant is not always available and you need the funding now.

7. Question, Small business owner:  But is it tax season and my accountant doesn’t have time. What are my options?

Answer, Financial consultant: Then you will have to seek other, more expensive options such as your available credit lines, a payday lender that can fund without knowing the financial condition of your company, or even a factoring company that will lend based solely on your current receivables. Just be certain you evaluate all the costs related to that type of lending. Usually, the actual costs are higher that the quoted interest rate.

Next- More Small business owner- finance consultant Q&A 

Marj Weber
Marj Weber
Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 20 years: combining financial literacy workshops with one-on-one mentoring. Marj is currently President of Primed 2 Grow Inc. a company that provides access to capital for both existing and start up enterprises. She has provided term loans and working capital to hundreds of small business in South Florida. She was Chair of SCORE Miami Dade from 2010 to 2014 and served as a financial advisor for SBDC/FIU from 2014 to 2017. She also served as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has facilitated workshops under the auspices of Miami Bayside Foundation, Little Haiti Cultural Center and several local banks. She commenced her career as a real estate investment banker in New York.

[optin-monster slug=”vuslebyocndjsreaoncm”]