Entrepreneur Toni Brewer is undaunted by the current economic climate.
Brewer, a former educator who owns five daycare centers in and around Atlanta, speaks with self-assurance about ambitious plans for her next business ventures – a sports bar and a salon and spa.
Like many small business owners, though, Brewer needs cash to realize her dream, and that typically means securing a business loan, which in turn means making certain the loan application is in good order.
“It’s basically getting your documentation together, getting approval, and then moving forward,” Brewer says.
Q3 2022 hedge fund letters, conferences and more
Small Businesses Are Taking Out A Loan
Borrowing money is something plenty of businesses are doing, even at a time when rising interest rates and talk of a recession might cause others to balk. Some business owners, such as Brewer, aren’t dissuaded by such talk because they have ambitions they want to fulfill.
Others look to take on debt because they have little choice, forced to seek loans because inflation or other factors put their businesses in need of cash.
But getting a business loan isn’t always an easy task. Plenty of lenders look askance at loan applications that fall short of their borrowing requirements, and they send luckless entrepreneurs on their way because of poor credit, the business is relatively new, the owner lacks a solid business plan, or for other reasons.
Understanding what loan opportunities are available and what lenders look for can mean the difference in a loan application’s success or failure, says Elijah McCoy, CEO of McCoy Brokerage Service.
It was McCoy who helped Brewer secure most of her capital, other than a hard money loan that she later refinanced with his assistance.
“Different lenders target different types of investments for their portfolios, so it helps to know which lender is best for your type of business,” McCoy says. “The trick is to match the business owner’s objectives with the most appropriate lender in the most timely manner.”
Because business loans aren’t always easy to come by, the Biden administration recently announced a proposed policy change that would let new lenders take advantage of the Small Business Administration’s loan guarantee.
Making More Money Available
The goal is to make more money available to small businesses, especially in minority and other underserved markets “where borrowers are most acutely shut out of current lending,” the White House announced.
The more opportunities, the better, says McCoy, who founded his company in 2006 after witnessing too many business owners struggling to obtain financing. Within two years of his brokerage’s birth, the nation fell into the Great Recession and lending in general dropped off.
In the post-recession years, small business lending recovered, but the recovery was weak. That was at least in part because of a decline in the number of large banks, community banks, credit unions and thrifts, a trend that had begun as early as 2004, according to a Consumer Financial Protection Unit study.
Those factors make it even more important that small business owners in need of money learn as much as they can about lenders and their requirements, or at least team up with someone who has that knowledge, McCoy says.
“Put all your ducks in a row,” he says. “Do your homework, do all of your due diligence. Know the company you are going to submit your information to.”
McCoy says money is out there along with opportunities, whether the business owner plans a startup, an expansion or just needs working capital. But borrowers need to know all the places to look and the correct moves that are necessary for accomplishing the goal.
Then, just as Toni Brewer has done with her five daycare centers and plans for the sports bar and salon spa, it’s a matter of making those business dreams come true.
About Elijah McCoy
Elijah McCoy is CEO of McCoy Brokerage Service, a company he founded in 2006. McCoy’s firm works with businesses throughout the country that are trying to secure financing. Much of McCoy’s clientele is in healthcare, such as doctors, dentists and pharmacists, but he also has worked with a broad range of people in other industries. He is a certified commercial loan expert and financial consultant.
