NASE Blogs

From The Trenches ... Finding Working Capital

Apr 05, 2010

Question:        I’m a female and own my own business but am really being hurt by the economy. If I’m going to survive, I need to find $20 or $30 thousand in working capital until things turn around. Where do I find funding for a struggling business that is having trouble paying its bills?

Answer:          While it might not be very comforting ... you are not alone. We hear scores of others repeating your situation every week and there are hundreds of thousands of micro businesses around the country that are walking in your shoes. Sadly, lenders are not being any easier on businesses in their lending requirements. The key is to know some of the resources and make sure that the information you give them is well prepared to make you stand out as a good risk against the other people that are competing for business loans.

The lending sources that might be out there to help you will vary depending on how much you need ... and how much you are struggling. The challenge is that if you can’t show that your cash flow problems are short term, lenders might get the impression that you’re a burning house and will be reluctant to loan you money. What you need to show is that with a little time and funding, your business will come out of its cash flow crunch, be profitable, and pay back the loan.

If you haven’t done so already, you need to put together a cash flow projection that covers at least the next six months and preferably the next twelve months of your business activity. Regardless of where you look for the money, potential lenders will want to see these numbers along with your business profit and loss statements for the past year or more, depending on how long you have been in business. Lenders are number crunchers and the better you can convince them that you know your numbers the more believable you are going to be. The worst thing you can do is ask someone for a loan and not know exactly how much you need, how it will pull your business above water, and what you are doing to make your business turn the corner.

As for sources of financing ... start with the Small Business Administration office in your area and, in your case as a woman owned business, more specifically look for loans strategically for women business owners. You might also find some sources if you can connect with a women business owners group that has worked with lenders in your area.

One of the first places to start is the bank that you do business with on a daily basis. This doesn’t mean you are going to just give them a loan application ... this could effect your credit and ability to get a loan. Just sit down with the bank manager and discuss their small business loan options. What their criteria is for making loans. The general amounts they like to make loans in ... some banks won’t have any interest in you unless you want $50,000 or more.

If you get the impression that your bank isn’t interested in doing small business loans or that you might not qualify, thank them and start looking elseware.

You also should check into the Small Business Development Center (SBDC) in your area. They usually have a good idea of the local lending opportunities for small business and can take a look at your numbers and business plan to help you write a good story. If you look into the federal programs, a couple of loan programs that might fit you are the Micro Loan program and SOHO Loan program ( for loans of less than $25,000.

If, you have difficulty finding a traditional loan through your local small business sources or don’t have the credit or collateral to get a personal loan, you will need to turn to friends and family or find someone who might want to partner with you in the business.

Outside these resources there are other options ... but that is another story better saved if you can’t find a traditional lender.

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