Be Smart Before You Restart

3 Key Steps for a Successful Small Business Loan Application

simple answer is planning and preparation. Obtaining a small business loan does not have to be difficult. In fact, working with your credit union can be a partnership rather than a time consuming process.

Step One

If you are just starting out or have less than two years of operation, then a business plan is critical. With that being said, the business plan does not have to be elaborate, but key information should be highlighted such as:

• One or two year projections (Revenue/Expenses/Cash Flow). What does your business do?
• Describe how you will utilize the loan proceeds. Are you buying equipment, expanding, hiring? Briefly describe how the loan will benefit the business.
• The amount of the loan request, type of loan and how will it be paid back? This should already be included in the projections.

Even if your business has been fully operational for two or more years, this data should be readily available for the credit union to review.

Step Two

Gather the information that will be required by the credit union. This includes two years of tax returns (personal and business), a current debt schedule of existing business related loans, personal financial statements and a fully completed business loan application. If additional information is required, the loan officer will advise.

Step Three

Be prepared to answer questions about your personal credit. If you have some late payments, detail reasons as to why the late payments occurred. If the business has credit, then make sure the Dun & Bradstreet information is correct. If the business does not report to Dunn & Bradstreet, then provide the loan officer with payment history for existing business loans. If you have high personal credit balances, then explain why your balances are high and detail a plan as to how you are paying those loan balances down. Remember, your loan officer should be an advisor to your business, not an adversary! Working in the advisory role to your business; as would your accountant and attorney is the philosophy that I believe works best for the relationship to grow. Look for this type of relationship from your loan officer.

Finally, put everything together in an electronic or hard copy format. The better prepared you are by planning ahead, the quicker you will get that small business loan approved!

Five Reasons a Revolving Business Line of Credit May Benefit a Small Business

1. Flexible terms – Traditional loans require set monthly payments that may impact cash flow during slow months. Unlike an amortizing loan, if a business has a slow month, it can pay the minimum amount due – usually interest only.

2. Access to Cash on Demand – Unlike an amortizing business loan, a revolving line can be accessed at any time to meet a company’s short term borrowing needs. This allows the business to continue to operate efficiently and provides stability to cash flow.

3. Flexibility of Use – Traditional term loans have a specific use whereas a business line of credit allows the business owner to use funds for a wide range of short term borrowing needs such as payroll, material purchases and even for multiple purchases at one time.

4. Separates business from personal use of funds – Many small business owners utilize personal liquidity to fund business cash flow. The business line of credit enables owners to separate personal and business expenses. Furthermore, a business line of credit allows you to track expenses in an efficient manner.

5. Builds Business Credit – Many small businesses lack business credit. Starting out with a business line of credit allows the business to establish a payment history. This is essential for vendors and future growth opportunities that require larger loans.

Riverfront Federal Credit Union offers loans for real estate, equipment, vehicle and lines of credit/working capital. For more information please contact Anthony Pomponio, Chief Lending Officer, at (484) 345-4160. NMLS #744577

Business Credit Card Benefits

As any small business owner can tell you, a business can host a significant amount of financial transactions on a monthly basis. In many cases, the transactions often exceed the current cash balance the business has on hand. For this reason, having a business credit card can ease the working capital requirements for any business.

Some of the primary benefits include:

1. Separating personal and business expenses – not only will this keep the IRS happy, it helps save time for record keeping. Most of the time, your bookkeeper simply downloads the transactions from the credit union website, making record keeping a breeze!

2. Access to Cash Flow – having sufficient cash flow is important to any business. However, some start-up businesses may not yet qualify for a working capital line of credit. Business credit cards can fill in the gap between start-up and full operations. Also, in some cases, obtaining a business credit card is easier to obtain than a traditional business loan. For established businesses, having a business credit card and a business line of credit often work in tandem to reduce stress on cash flow.

3. Reward Points – many business credit cards now offer rewards! These rewards can be used for office equipment, gas or cash back!

4. Boost the business credit rating – having a business credit card is like a personal credit card in terms of boosting a credit rating. Paying off the balance regularly increases the business rating, especially for startup businesses. Once established, getting a business line of credit or other commercial loan will be easier – particularly if go back to the credit union that offered you the business credit card!

5. Control of employee spending – many credit unions offer business owners the flexibility to create sub accounts for employees. The ability to do this will help manage expenses, control spending limits and monitor spending habits.

So, apply today for a business credit card from your local credit union!

Why Become a Riverfront FCU Merchant Partner?

Referrals

Riverfront FCU is an established, full-service financial institution that has been putting its members on better financial paths since 1948. As a merchant partner, your participation in our program means that your company will be recommended to a multitude of Berks County residents who could potentially utilize your services.

What Exactly is a Commercial Loan?

As the Chief Lending Officer at Riverfront Federal Credit Union, I’m often asked “What is a commercial loan or a business loan?” Basically, a commercial loan is the same as any other type of loan; except the lending institution is loaning money to established entities such as a business, partnership, a limited liability company or a corporation. So what are the main differences?

The process for commercial lending definitely has a unique approach when it comes to underwriting. The lending institution will look at cash flow of the company first to see if the company generates sufficient cash flow to support the loan amount. Second to cash flow, is the evaluation of collateral. For example, if the loan is utilized to purchase equipment, then the equipment becomes the collateral. If the loan is utilized to purchase a commercial building, then the building becomes the collateral. In some cases, a loan may be unsecured -whereas no collateral is offered. In these cases, the cash flow of the operating entity becomes even more important. Contrasting this type of loan to a consumer loan; whereas a credit score or debt to income may have a higher emphasis on underwriting.

Riverfront Federal Credit Union specializes in commercial lending. For more information, please call Anthony Pomponio at (484) 345-4160 and we can discuss your business needs with the goal of improving cash flow and making your business a success!

Business Credit Card Benefits

…And we’re prepared to open lots more in the future.

We understand the needs of small business owners because we’re local, we listen, and we create meaningful relationships with them. We don’t see them as “numbers,” like many banks do. In fact, it’s just the opposite. Since Riverfront is a nonprofit institution, our members are actually owners of the credit union. So, ironically, a small business owner who becomes a member of Riverfront actually has a vested interest in us! We offer loans for real estate, equipment and vehicles, as well as lines of credit/working capital and business credit cards. And we can do it with lower fees and better rates when compared to many of our competitors.

If you’re a small business owner, what do we have to offer you when you come through our doors?

• A great solution for startup businesses
• Owner-Occupied Commercial Mortgages. You can borrow up to 80% financing to purchase or refinance real estate property. Financing is available for office buildings, warehouses, professional offices and retail properties.
• Investment Real Estate Business Mortgages are available to purchase or refinance your non-owner occupied commercial or residential real estate property up to 80% financing.
• Business Equipment Loans provide a variety of ways to finance asset purchases, expand operations, or even plan build outs.
• Business Automobile Loans are available for new and used cars, cargo vans, SUVs and commercial trucks for your business.
• Non-Variable Rate Business Visa® Platinum Credit Card and Business Visa® Cash Rewards Credit Card. Both have several benefits, such as easing cash flow by providing the ability to make daily purchases, and separating business from personal expenses.

We’ll sit down with you and help determine if you qualify for these products and services. And we’ll explain each offering in detail. At Riverfront, your business is our business. So come in – our doors are open!