Three Great Business Planning Resources

If you are new to running a business, just the thought of creating a working business plan can be overwhelming- and this is on top of all the other things you need to master to get your business from ideation to operation. You don’t want to add to the mountain by consulting a ton of different resources.

DartsYet, this is precisely the mistake that many aspiring entrepreneurs make. Little do they know that all that information can actually be working against them, creating confusion, lack of direction, and inhibiting real action.

For this reason, I’ve compiled a short list of what I feel are essential resources that will give any new business owners the tools and knowledge they need to get the process of building their business going without being paralyzed by all the data, opinions, and options.

The Small Business Association (SBA)– The SBA has a ton of great resources that can help you start and build your business from scratch- including an assortment of tutorials, such as this one on creating business plan. You should also consult the directory of Small Business Development Centers to see if there is one in your area. These centers work in conjunction with the SBA to offer a variety of consulting and training services and other support.

SCORE– SCORE is another great resource to check out. They provide free mentoring to aspiring small business owners. You can also take a look at their free business plan template. It is very easy to follow and it comes with helpful explanations.

Getting to Plan B: Breaking Through to a Better Business Model– When it comes to business books, just the shear number of popular options could make you dizzy. Don’t worry about all the “must reads” out there. At most, don’t spring for more than two or three (though you’re pushing it) titles. If you are just starting out, then Getting to Plan B, by John Mullins and Randy Kamisar, one of the only books you need. It goes through the process of developing a successful business model, one that is bound to change along the way (sometimes many times over). It’s about $23 for a hardcover copy and $18 for the kindle version on Amazon. It’s well worth the investment. If you want to know more about the book, here is a thorough summary of the main concepts it covers.

If you take the time and effort to use these three resources to the fullest, you’ll have the basics in place to pursue your business idea and turn it into a successful, sustainable business.

How Can You tell If Your Bank Is Small Business Friendly?

I find it funny that some business owners may spend more time shopping for a $300 laser printer than they would shopping for a bank. Choosing a bank for your small business should involve more than just opening a new account at your personal bank or picking the nearest branch. You need to understand what services you require, how much they are going to cost you, and how open the bank is to working with small businesses.

Small Business Friendly Banks Actively Make Small Business Loans

handshakeOne sign that a branch is committed to small businesses is its history of lending money to business owners in the community. If you want to know how your local bank stacks up in the small business lending department, you should definitely check out this handy bank lending grader tool. The tool rates 6,800 banks in the United States based on quarterly FDIC call reports, as well as the total small-business loan balance for each bank divided by its total domestic deposits, and then assigns each bank a grade A through F. To get a good rating (A or B), the bank would need to use at least 10% or more of their deposits to make small business loans. The only thing to keep in mind is that this tool does not offer any insight into how much a bank gives back to a particular local community.

Other Ways to Rate Your Local Bank

What is the bank’s lending authority? What’s the largest loan he or she can approve without checking with higher ups? Relationship managers at community-based banks often have more discretion than those at a unit of a big institution. But, the distinctions between “large” and “small” banks have blurred with the industry’s consolidation. Many community banks have undergone mergers that now allow them to offer a wider range of services.

What is the bank’s underwriting criteria? Smaller, regionally focused banks tend to understand local market conditions more than big national banking institutions. Small, local banks often provide more one-on-one access to a loan officer and put more emphasis on a borrower’s character rather than just applying a credit-score model.

Does the bank make SBA loans or is it a non-SBA lender? Does the bank work with the U.S. Small Business Administration (SBA) loan system? Federally subsidized loans help protect the bank against default, which makes it easier for banks to lend money- that is, once they get through all the paperwork! SBA loans are available to businesses whose credit histories, cash flows or collateral would be inadequate for them to obtain traditional bank loans, and the SBA typically offers more flexible repayment terms. For a list of SBA preferred lenders near you, you can search their online directory.

What business services does the bank offer? Here is where larger banks may have a leg up on smaller institutions. Ideally, you need to think about the long-term relationship. Consider not just what you need today, but services you may require in 18 to 24 months out. See if your local branch offers added benefits such as online services that help save time and money. These may include sending invoices, collecting payments, payroll and loan applications. Some banks may have requirements in place in order to access these services, such as requiring employees to use direct deposit.

In short, the search for the right business banking services should not be approached in the same way you would a typical supply or product purchase. This is all about finding the institution that is willing to build a relationship with you and your business. That’s a real value that can be leveraged in good times and in bad.

Are Obama’s Efforts Enough for Small Business?

Last week, the Obama Administration announced that it is taking a series of “immediate actions to help small businesses” survive and thrive in the challenging economic conditions we, as a nation, continue to find ourselves in. But many small business owners are left wondering if Obama’s efforts are either immediate or enough to make any significant difference.










Many are quick to point out that some of the initiatives included in the supposedly new package were part of an already established executive order. Others, maintain that most of these moves will only benefit a relatively miniscule population of small companies, such as construction contractors.

Here’s a quick rundown of the Obama Administration’s small business initiatives:

  • Paying government contractors quicker in hope that “those prime contractors will similarly accelerate payments to their small business subcontractors.”
  • Recommend that Section 179 expensing remains at $250,000 for one year. This will allow small businesses to write off up to $250,000 in capital investments in 2013. If the extension is not approved by Congress then the expensing limit for small businesses is scheduled to decline to only $25,000 in 2013.
  • Re-launch the SBA’s Small Loan Advantage program (now called SLA 2.0). Obama is pushing to raise the maximum amount a small business owner can request for an SBA loan from $250,000 to $350,000. Obama is also seeking to streamline the loan process, so it will be easier and quicker for lenders to extend loans to small businesses.
  • For companies that need surety bond guarantees under $250,000 the SBA will be initiating the “QuickApp” streamlined application. This will reduce paperwork in the hope that small companies, particularly in the construction industry, will have an easier time competing for and winning additional business.
  • Reduce paperwork for SBA’s Disaster Loan Program so that families and businesses will be able to more quickly and easily access support for rebuilding after a disaster.
  • Make it easier for community development entities (CDEs) to bring in private investors for start-ups and small businesses operating in lower‐income communities by revamping the New Markets Tax Credit.

Will these moves truly help small businesses? I’m skeptical; but I guess only time will tell.

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Five Tips for Finding a Good Bank for Your Small Business

In my last post, I listed 10 notoriously ridiculous fees that many of the big banks are charging these days. If you are a small business owner then choosing the right bank is all the more important. As you make an effort to maintain a healthy cash flow and get financing when you need it, you want a bank that will work with you and not look for ways to swindle your hard earned dollars. Here are five tips to consider when looking for the right bank for your small business:

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1. Understand your needs

The very first tip to finding the right bank for your small business is to have some idea of what your business banking needs are. If this is your first business, then it may be a bit of a guessing game. In that case, it pays to ask another business owner, a qualified professional, or business consultant what services you will need to keep your business running smoothly.

2. Understand the trending in lending

The banking sector is currently dominated by the big mega banks, such as Bank of America, Capital One, and Chase, and this applies even in the suburbs and rural communities. Though according to the latest NFIB small business reports, the majority of small business owners are not seeking financing, access to small amounts of credit is essential to maintaining a healthy cash flow.

Some are quick to point out that large banks used computerised models to calculate the risk of lending on a national level, whereas small banks are more likely to understand the nuances of the local area much better and so are more likely to lend to viable local businesses that the bigger banks may overlook.

3. Search for SBA Certified Preferred Lenders

Even if you are not looking for an SBA loan, you may want to do a search for SBA Certified or Preferred Lenders in your area. This means that they have a contractual relationship with the SBA and are members of the Certified Preferred Lender (CPL) programs. Why is this important? The SBA loan process is known to be drawn out, and paperwork heavy. By being a CPL, it shows that the financial institution is making a commitment to the small businesses in that area- one that is not so profitable either.

4. Make sure you are in the know

Before you sign on with a bank, make sure you have read and understand their banking fees, hours and methods of operation, and what services they provide. Most banks these days have this information online.

You should also make it a point to go down to your local branch and see for yourself what kind of service you get as well as the overall feel of the place. When it comes to banking, you want a place that will build a long-term relationship with you, not treat you like a number.

5. What are customers saying?

In these days of social networking, it would be a good idea to spend a few minutes looking at what customers say about the financial institution you’re considering. Just a caveat: there are always bound to be complainers even where a business provides a good product or service. You want to get the sum total of consumer sentiment. It may also be a good idea to ask your business contacts of those in your social network who them recommend.

Speed Dating Business Finance Style

 The U.S. Small Business Administration’s West Virginia office has a great idea for spurring small business: speed dating. The office sponsored an event that provided a forum for small business owners to present their business plans to bank lending officers and economic development officials. Each entrepreneur had five minutes to request funding, before they had to move to another of the 25 lenders and repeat the pitch.


Small businesses have been suffering due to a lack of funding. Banks have been leery of lending, but businesses cannot expand or be created without an influx of cash. West Virginia’s Small Business Administration Office used speed dating to reverse that trend by offering business owners introductions to lenders. The lenders encouraged the business owners to call and follow up even after they had used up their five minutes of face time.

New legislation promises to spark new business lending. President Obama’s job bill waives the fee that small businesses pay for a SBA (Small Business Administration) loan. The legislation also increases the government’s guarantee of SBA-backed loans to 90%. In addition, it grants a $30 million fund to community banks t lend to small businesses.

Between the new legislation and the states’ activities to get business moving, small business owners can expect an increased flow of funding to their companies.

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Microloans Provide Needed Financing to Some Small Businesses

As the economy continues to sputter along, the sources of traditional small business financing have been quickly drying up. Collectively, banks and commercial lenders are requiring more collateral while simultaneously approving smaller loan amounts. And this is coming as other personal financing products, such as home equity loans, are getting harder to come by. As a result, many new and growing small businesses have been forced to do a lot of scrambling about in search of financial support.

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One promising ray of hope for small businesses in this dismal environment is the SBA-based microloan program. Based on a financing system that was designed to help small businesses in Third World countries, the SBA started this program in the 1992 with the goal of offering accessible financial assistance and counseling to new and growing small businesses. There are currently several nonprofit, community-based intermediaries funded by the SBA. These microlenders provide small business loans as well as training and technical assistance to its borrowers.

Now, the economic stimulus bill recently approved on Capital Hill provides a $30 million boost to the SBA’s microloan program. This is in addition to the $20 million already earmarked for microloans.

Though loans from microlenders can range from less than $100 to as much as $35,000, with a term as long as six years, the average size of a microloan is $13,000 with an average loan maturity of 42 months. The interest rate can be negotiable, but it tends to be higher than it is for standard business loans (usually between 8%-13%). A microlender can also serve as a subordinate lender to banks, sometimes enabling the loan to be increased to $50,000.

As the recession continues to deepen, microlenders across the country are experiencing an increase in inquiries from would-be entrepreneurs and small business owners, including entrepreneurs starting “high risk” ventures and established businesses that have bad credit or a poor sales history. Most applicants are drawn to the availability of financing, the easy approval process, the personal touch that most microlenders have to offer, as well as the free business training and technical assistance.

If you are in need of a small loan to help get your business off the ground or to expand an existing business, this program is definitely worth checking out. For help finding a microloan lender, the SBA provides a listing of all the intermediaries that are part of the SBA’s microloan program. There are microlenders located in almost every state.