Workshop offers loan lessons for small businesses

Small business owners face a challenge when exploring the world of financing. It’s difficult to know about every program that’s available and it takes some work to find the right one.

“I wish you could call a number for one stop shopping of your financing needs,” said Brian Nowicki, manager of economic development for the Wisconsin Housing and Economic Development Authority (WHEDA).

Nowicki was part of a lending panel at a workshop held recently at ManpowerGroup in Milwaukee. The three-hour workshop, “Thinking Outside the Box: Creative Funding Options for Small Businesses,” was part of Milwaukee Small Business Week.

BMO Harris Bank, the City of Milwaukee Office of Small Business Development and Mosaic Communications hosted the panel discussion, lunch, networking and individual meetings.

The panel included Nowicki, Eric Anderson, small business lending center manager of small business underwriting at BMO Harris, Michael Hetzel, senior loan officer at Wisconsin Women’s Business Initiative Corp., Mary Trimmier, business development specialist at the U.S. Small Business Administration, David Kircher, senior vice president, southeast Wisconsin regional manager for Wisconsin Business Development Finance Corp. and Salvatore Strehlow, member of Fund Milwaukee.

Mike Dillon, director of small business sales and service for BMO Harris Bank, moderated the discussion.
“I don’t have to tell you that it’s been a challenging economy,” he said.

Small businesses have been slow to hire and invest, but that’s beginning to turn around and cash flow is king, Dillon said.

It can be a tough time for business owners to obtain traditional loans, so the panel discussed alternatives.

Businesses without enough collateral for a traditional loan should consider an SBA loan, Anderson said.

An SBA loan is also an option for small business owners that want the option of reducing the down payment on the loan to free up working capital, he said. The loan repayment period can also be extended in most cases.

Lines of credit can be useful for freeing up capital to invest in equipment, he said. And some credit cards with reasonable financing rates can be used up to $50,000 without collateral. Leasing equipment is also a possibility for those that want to reduce down payment requirements.

Anderson advised small business owners to check their credit scores using reputable sources, create a good business plan to provide a strong foundation, have a specific use and timeline for the funds, and evaluate their businesses in comparison to others.

“Are your margins typical for the industry?” he asked. “Be realistic and realize when your business is going to start generating positive cash flow.”

As an alternative, WHEDA focuses on deals in which an SBA loan is not a good fit, Nowicki said. Its small business and agriculture loan guarantee programs have financed more than 29,000 businesses.

In 2012, WHEDA began offering participation lending, in which it purchases up to 50 percent participation on loans up to $2 million.

The organization also recently launched the Transform Milwaukee loan program, which will lend $100 million to restore economic vitality to the city.

The Wisconsin Business Development Finance Corp. prides itself on knowing which resources small businesses can contact, Kircher said.

It’s critical for business owners to have a plan for what loans will be used for, he said. The WBDFC will do what it can to help entrepreneurs get into business, but need to have the confidence those businesses will survive.

Dreams are important, but they should be attainable because “passion doesn’t make payments,” Kircher said.

The independent, nonprofit, statewide organization is an SBA 504 lender, a loan that requires only 10 percent down and can preserve business owners’ cash cushions.

WWBIC committed almost $4 million in small business loans last year, with an average loan size of $30,000, Hetzel said. The organization concentrates on women, people of color and low income individuals.

Usually, WWBIC loans help businesses in the first three years and are used for working capital and equipment. It is an option for those unable to obtain traditional funding, including those with credit problems.

“We are what we like to call a ‘life happens’ lender,” Hetzel said.

After making a loan, WWBIC tracks the startup’s monthly business financials to assure the business meets its goals.
The organization also offers technical assistance and free workshops on starting a business.

Fund Milwaukee is a group of friends and family that connects investors with entrepreneurs.

The group focuses on investments that meet its economic, ecological and social/community goals to ensure economic power resides in the local community, creating a healthy and vibrant ecosystem, Strehlow said.

“Our specific investments are all on an individual basis,” he said.

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