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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Sarah Brouillard
August 2003

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SBA Lenders

Look for long relationship, not quick cash, when choosing lender

By Sarah Brouillard

Show me the money” might be the only words on the tip of your tongue as a small-business owner searching for the right SBA lender.

Resist the urge to say them. Instead, business owners should first think carefully about what qualities they want in a lender, and then interview lenders to determine the best fit, say lenders of Small Business Administration-backed loans.

“Small-business owners often look no further than getting their money,” says John Kimball, vice president and manager of SBA lending at St. Anthony Park Bank in St. Paul, part of Sunrise Community Banks. “But will the lender actually get to know you and your business?”

There are those SBA lenders that, like casino slot machines, give you a little money once in a while when you pull the handle. But small-business owners should look for a teacher, not an automaton.

Relationship building — rather than one-stop shopping — is key to making sure your company’s needs are considered and handled for the long run rather than the short term.

First, choose a bank that best fits your needs, says Marty Mixell, vice president and SBA department manager at St. Paul-based Bremer Bank.

The most active and expert participating lenders qualify for either the SBA’s Certified Lenders Program or Preferred Lenders Program (PLP). Both programs offer a quicker turnaround on a loan application. Certified lenders receive a partial delegation of authority to approve loans and receive a response on their loan guaranty applications from the SBA within three days.

Preferred lenders have full authority to approve loans. They submit applications to the SBA only for an eligibility review, on which they receive a quick response, says Mixell. Turnaround time is usually within 24 hours.

The designation is given to lenders who have proven they have a thorough knowledge of SBA rules and regulations; have met the SBA’s underwriting standards; are experienced in both documentation and loan servicing. They also have had to prove they do a lot of volume, thus making them more familiar with the various SBA loan programs, says Thomas Burke, vice president at Wells Fargo in Minneapolis.

“Lenders that are PLP are not required to have the SBA review their credit decisions. They can provide faster turnaround for the borrower, getting them their money sooner,” he says.

There is also the SBA Express program, which makes it easier and faster for lenders to provide small-business loans of $250,000 or less.

Under the Express program, lenders are allowed to use their own forms and processes to approve loans guaranteed by the U.S. Small Business Administration. This provides a “much condensed” rapid response from the SBA, says Chris Miller, business banker at TCF Bank in Minneapolis, which just launched its SBA loan program via its business banking division in the last few months.

With Express, the SBA usually responds within 36 hours of receiving the complete application, and banks determine requirements for applicants.

Look for a bank that has stability. Banks with long histories of constant mergers and acquisitions makes where your next loan will come from less certain.

Then pick a red-blooded human being with whom to do business.

“Having a real name and face to contact regarding questions…is very important,” says Kimball.

SBA lenders should be picked based on their interest in your business concept, and their willingness to get to know the ins and outs of your business. They should want to feel eager to build on your success as much as you do, report SBA lenders.

Test your potential banker, says Kimball. Don’t be afraid to ask the banker to meet you at your place of business. A good banker likes to meet on site to learn more about the borrower and the business, he says.

Look for a lender who is knowledgeable in the industry, and who is experienced.

“Business owners don’t want to be assigned to the junior banker who is rotating his way through on a climb up the ladder,” says Kimball.

Find someone who looks at the bigger picture, who perhaps suggests alternative financing options, and demonstrates a desire to work to “get the job done.”

The person should be creative and not willing to accept “no, we can’t do that loan.” Instead, the lender should be asking “how can we get this loan done,” says Kim Storey, vice president and manager of SBA lending at Highland Banks of St. Paul. Storey works with lenders at Highland Banks’ seven locations to identify borrowers that are potential SBA loan candidates.

Most importantly, the lender should seem interested in the discussion.

“Banking is not a ‘one hit’ financial transaction, but rather the beginning of a mutually beneficial relationship. That is why you need to connect with your banker,” she says. “Your banker should be with you from the up-start stage through the succession plan when it is time to retire.”

Someone who will get to know your company’s history and your payment history can help speed up the loan process and increase the chances of getting a “yes,” especially as the company may require additional money for more equipment, real estate or working capital.

“Good bankers often act as an informal board member, someone to bounce ideas off of,” says Kimball.

Your banker should not only provide financing, but partner with you to provide information on cash management solutions, checking and saving accounts, personal financial services, and so on, says Storey.

Look for a lender that will give you a written proposal that clearly identifies the rate, term, all fees and conditions of a loan. Generally, the best SBA lenders will respond to a complete application with a written proposal within a week, says Kimball.

Also, there are many SBA loan programs to choose from, including real estate loans, term loans, and lines of credit.

One other SBA lender type is the 504 Certified Development Company Program, which provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. A CDC is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses. There are about 270 CDCs nationwide. Each one covers a specific geographic area.

A combination of these might best suit some companies, and SBA lenders should be willing to consider all these factors and inform you of them.

In addition, there are many free services available to assist business owners in Minnesota. Good lenders can connect business owners and soon-to-be business owners to these resources.

“Your small business is your lifeblood,” says Storey. “Your banker needs to understand that, and treat you and your business with the utmost respect.”