Financing Options For Your Business

By, Mark Abell,
SBA Director at Hillcrest Bank

A Common Sense Approach to Expand Your Business

So, you want to expand your business?

After years of hard work developing demand, you’ve grown and are at a crossroads of opportunity. Do you continue on your current track? Or do you invest in yourself and that new opportunity, changing the trajectory of your business? With small business financing you can take advantage of that new opportunity.

These situations are not unique to any one business. Is there a common sense approach to knowing if a bank is the right fit for your needs? If yes, what options for financing exist to help your business expand or grow?

Banks are generally the right fit for business financing if:

• The business has been in operation for 2+ years
• The business is profitable and can support the payments on the needed debt
• The owners have experience in the industry and a good credit history
• The business has collateral to support the loan

The Five C’s

In banking, that list is known in short form as something called the “Five C’s of Credit:”

• Conditions
• Cash Flow
• Capital
• Creditworthiness
• Character & Collateral

It’s ideal if all five conditions are met, but not always necessary. If your business has a weakness in one or two of the Five C’s, a bank may still be able to assist you by using an enhancement, such as a Small Business Administration (SBA) Guaranteed Loan to support your business.

How do SBA programs help fund small businesses?

SBA programs allow the bank to offset risks while ensuring we don’t do something too risky. Let’s look at some examples:

• Perhaps your business needs new equipment for an expansion opportunity. A bank’s conventional loan term of 5 years may make the payments too high to be feasible. However, an SBA loan with a 10-year term could make the payments more affordable.
• You’re an experienced manager for a business you love, and you are given the opportunity to purchase the business. With little collateral, we can use an SBA loan toward the purchase, lending much more than the collateral value.
• You are dreaming of starting a business. You have a long track record of successful management in that industry, a strong down payment, solid collateral, and an external income that further reduces risk. However, you have no evidence of history profits and cash flow. This is another instance where an SBA loan could assist in financing.

Hillcrest Bank offers a suite of solutions aimed at providing personalized service and the resources you need to run and manage your business. From lending solutions to deposit and treasury management solutions, you can count on us for practical advice and streamlined decision-making to help you achieve your goals. We call it Common Sense Banking. Visit HillcrestBank.com for more information.

For further help or guidance, talk to Colette V. Chester, Vice President, Community Banking Leader for Hillcrest Bank. Colette is a seasoned banking professional with extensive experience in business banking with the Boise community.