"Bank Lending Loosens", Say the Reports. Opportunity for Retailers?

According to an Associated Press report on June 18,

"Banks are making it easier for small businesses to get loans, and they're giving companies better terms and lower interest rates. 

"Banks are taking more steps to persuade small businesses to borrow,' said Dun & Bradstreet Credibility Corp. CEO Jeff Stibel. 'Interest rates are falling. Banks are willing to lend for longer terms. We're entering a New Normal,' he said."

This sentiment was echoed elsewhere.

"As the economy improves, businesses are able to get funding from traditional sources, and they are less desperate. We are starting to see a flight away from short-term, high cost money," stated Biz2Credit CEO Rohit Arora on their May Lending Index. 

Well. That sounds encouraging, doesn't it? It also might mark a fine opportunity for retailers looking to refinance, expand, or even acquire other stores.

How to take advantage? As always, especially as retailers, it is essential to do your homework.

• Make a strong case for where your business is now
• Show how your business compares favorably to others in your retail segment (the Retail Benchmarks at The ROI can help)
• Prepare a cash flow plan, showing how and when you will repay the loan 

Approach Banks That Actually Lend to Small Business

And, not to be overlooked, search out those banks most likely to lend to retailers: the community banks. 

Here are 2 useful links for you from the Resources for Retailers page of Retail Startup (one of our microsites.)

• Independent Community Banks Locator, from the Independent Community Bankers of America. Just enter your ZIP code, say how many miles you are willing to travel (from 25 to 100), and they immediately identify all the community banks in that area.

• Banking Grades.  Based on data provided by the banks to the FDIC, this organization assigns a letter grade (from A to F) to banks for their small business lending. You can search by bank name, by ZIP code, by City & State, or by county. 

And here's another one from The Retail Owners Institute site:

• The GMROI "Bankability" Rater, a very unique approach that could give you a competitive edge when making your case with lenders.

All 3 of these resources might save you time, and hopefully, frustration! And, they're all free!

Are You Ready? Banks - Especially Community Banks - Are Looking for Good Retailers as Customers

Those plans to grow, expand, update and upgrade that have been on hold for the last few years, due to lack of financing? They may once again be pursued!

Now is an opportune time to reach out to your banker to get the financing you need for your business.

"Data from the Federal Reserve show banks are more willing to lend and their customers are seeking more credit as both groups gain confidence in the economic outlook," according to Bloomberg News. "Easier access to low-cost financing means retailers can expand outlets and hire the staff to run them."

"Community banks participating in the Small Business Lending Fund (SBLF) have consistently increased small business lending over the past two years," said Deputy Secretary of the Treasury Neal Wolin. SBLF encourages lending to small businesses by providing capital to community banks on an incentive basis: the interest rate the banks pay is reduced as the bank increases its lending to small businesses.

Remember, it is not just retailers who have had to make adjustments in recent years to survive. So have the banks. They too are having to be far more competitive.

Even better, there are tools available to you that help to level the playing field when it comes to doing business with one of them. Here are a few to get you started:

1. First, remember that you are interviewing them!

You are looking for a lender you can work with, who respects you, and most of all, who deserves to have your business. Find someone who wants to earn it!   

2. Make a "performance based" short list of banks to interview. 

Don't limit yourself by geography. Your goal is finding a bank that understands your business. 

• Be sure to include one or more Community Banks. Go here to use the Community Bank Locator. Just enter your ZIP code, and immediately get contact info on the nearby community banks.
• Also, go here to see the Treasury Department's map and list of all Small Business Lending Fund participating banks. (That's the  incentive program described above.)   

3. Check their "grades" for Small Business lending!

Yep, banks are like any other business; see which ones make the grade! 

Go here to see the "banking grades" for Small Business lending of each bank you are considering. You can search by ZIP code, city and state, or bank name.      

4. Put together your loan proposal - and your cash flow projection.

The key: not only showing what you would do with the money you borrow, but having the cash flow plan to show when you can pay it back!

• Go here on The ROI site to see the checklist of what a Loan Proposal should include.
• Then, use the online 3-in-1 INTEGRATED Calculator  to do your own cash flow projections.