SCORE can help entrepreneurs and small business owners wade through their funding options.
Stymied. Stuck. Frustrated. You have a great idea for a new business—a sure winner. You have the idea, yes, but not the money to get started. You thought about going to your local bank to ask for a loan, but the whole process is a vast mystery. You want them to approve your loan application, but you've never applied for a commercial loan and don't know how. In addition, you’ve talked to other small business owners and learned the bank loan that launched their new business became the debt that later killed their business, so you are concerned.
Mentoring and More
SCORE can help you succeed. SCORE is a national nonprofit association dedicated to helping small businesses get started, grow and achieve their goals through education and mentorship. The local chapter serves 10 counties in central Illinois with resources, workshops and free, confidential mentoring.
The cornerstone of assistance is the written business plan. It is strongly recommended that all entrepreneurs who want to start or grow a business create a written business plan because the process will help them anticipate obstacles, manage costs and plan for the future. When a commercial bank loan is needed, the business plan serves two vital roles: it helps the bank's loan officer understand why this business (or business idea) deserves a commercial loan, and helps the owner manage the business to produce the regular cash flow needed to pay back the loan on schedule.
SCORE helps business owners develop written business plans in three ways: through templates, educational workshops (one for starting a business and another for growing your business) and free and confidential mentoring (face-to-face, online or by phone). Mentoring is probably the most important, as different types of businesses face different challenges—from the aging of accounts receivable to the reliability of repeat business—that the mentor can help entrepreneurs address in the business plan.
In addition, assistance specific to commercial bank loans is also available. SCORE mentors understand how loan officers will evaluate the loan application and can coach the small business owner through completion of the loan application—anticipating loan officers’ potential concerns and addressing them from the start.
“For those who appreciate a little extra preparation, one of our volunteers used to be a commercial loan officer,” adds Jim Peugh, co-chair of the SCORE Peoria chapter. “Some clients will 'dry-run' the presentation to get feedback from him before meeting with the real banker.”
Building Partnerships
Some applicants for commercial loans can feel frustrated if their application is rejected, but in reality, the banker wants to help the small business owner succeed because their interests are aligned. The small business owner wants the bank loan so the business can succeed, while the banker wants the business to succeed so the commercial loan can be repaid. In this sense, the banker is the small business' partner in success.
“Working side by side with SCORE Peoria, our finance team was able to make confident decisions and proceed knowing that we could succeed as we approached a bank for a loan,” says Cindy Shuford, cofounder and president of the Washington, Illinois-based not-for-profit ministry Threads, Hope & Love. “Without SCORE’s guidance, we would have never known how to plan, how to acquire community support, and how to create the publicity we needed to make us viable candidates to receive the loan.”
“Our SCORE mentors can help people understand a wide range of funding options, including grants, but the commercial bank loan is the most widely used,” adds Peugh. “Regardless of the funding source, the written business plan will help secure the funding and help the business be successful.
“SCORE mentors can also quickly dispel misunderstandings about the sources of funds available,” he continues. “For example, some veterans have come to SCORE thinking the federal government will give them money to start a new business. We have been able to direct them instead to real opportunities in which their status as a veteran can help them in their new business.”
Whether it's developing a marketing strategy or an operational plan, SCORE mentors can help entrepreneurs identify and address issues before they become problems, guiding them through the process of developing a business plan and securing a commercial bank loan. Small business has a trusted advisor in SCORE. iBi
For more information, visit scorepeoria.org or call (309) 676-0755.
