Romancing the Loan – a must read for anyone wanting to borrow from a bank

Romancing the Loan by Larry Tyler

Review of  “Romancing the Loan” 

14 Principals for opening your lender’s vault.

Revealing the Secret Combination to YES. 

By Larry Tyler

Forward by Philip Campbell, Author, Never Run Out of Cash

I first met Larry over the phone a few weeks ago.  He had come highly recommended by Philip Campbell.  All I knew was that he was an ex-banker, and I read a 10 or 11 page article he had written – which turned out to be a very condensed version of his book.  It was directed more at franchisors, urging them to take the lead in helping their franchise network line up the capital they need to survive and expand.  It piqued my interest, and I dove right in when the full book (just under 200 pages) arrived in the mail a week later.

 I’ve always considered bankers to be the enemy.  You know the adage – a banker is someone who will lend you an umbrella when the sun is shining, but demand it back at the first hint of rain.  But Larry has a point:  you have to look at it from the banker’s point of view, and give him the ammunition he needs to get the loan approved.  You have to cultivate the banker – establish a trusting relationship.  You have to Romance your banker.  And Larry proceeds to tell you how.

Financial information, including cash flow projections, turns out to be the dating equivalent of candy and flowers.  Honesty and passion for your business figure prominently, of course. Also: frequent contact – whether the news is good or bad.  Heads up on key financial events.

 I found the book to be an easy read, and entertaining while he drove home his critical points about what you need to do to maximize your chance of approval. 

 An unexpected treat was Larry’s business philosophy, and it made me realize I need to be reminded of it every once and again.  And that is that business is all about relationships.  You have to cultivate relationships, spend time on them, be nice, spread the love – to make the relationships enduring and valuable.  It’s not only a good idea from a societal point of view, but it is good for business.  When things get dicey, you sometimes forget that it is better to give than to receive.  I’ve always preferred being nice to being an SOB, and Larry gives affirmation that this is the key to business, not just landing the next bank loan.

 Romancing the Loan – Highly Recommended!

review by Rusty Luhring, founder of Luhring SurvivalWare, Inc.

www.survivalware.com

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Franchising’s Credit Crunch

This just appeared in yesterday’s CSP Daily News, and is totally consistent with my last post re. giving the government a “P” for Pathetic for the state of the Small Business Credit market.

Here’s an excerpt:

Research presented at the Small Business Lending Summit confirmed what many franchisees have been complaining about for years: They can’t get the financing needed to expand or refurbish.

The researcher, Frandata, said franchisees across all industries would fall about 20% short of their capital targets for 2011, a gap of some $2 billion. The ripple effect will impede the recovery of both franchising and the economy in general, said Frandata CEO Darrell Johnson.

And..

Her comment, aired during a panel presentation by lenders and echoed by other presenters, prompted moderator and celebrity business writer Geoff Colvin to note the “giant disconnect between lender and borrower.”

Colvin was not the only one who seemed perplexed. “I’m totally confused by that,” said Bob Dorfman, head of the second-largest franchise in the Five Guys Burger & Fries quick-serve restaurant chain. “Fact is, someone is not telling the truth.”

See the full text of the article as this URL:

http://cspnet.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=7A9C575F4ACB4A8E87E27126FC71D02F

Small Business Lending: grade “P” for pathetic

“Few Banks Seek Funds For Small Businesses” was the headline of an article on page C1 of last Thursday’s Wall Street Journal (3/31/2011). 

Some banks reached for comment said there was little demand for loans.  Some small business owners reached for comment begged to differ. 

I don’t know whose fault it is – Congress, the SBA, an Obama advisor, the President himself – but their performance at helping small business has been pathetic.  With a capital P. 

What gets announced with great fanfare (we’re setting aside $30 billion to revive small business lending!) languishes in complexity and red tape (if you increase small business lending by 10% the interest rate we charge you is 1%.  If you increase lending by just 2.5%, the rate is 5%.  Now here are the forms to fill out each month so we can track your level of small business lending).

Community banks had applied for $7.6 billion of the total as of the deadline Thursday, so the Treasury department is extending the deadline until May 16, 2011.  The program is the centerpiece of September’s Small Business Jobs Act, according to the WSJ. 

One of the mistakes policy-makers make over and over again is to equate small banks with small business lending.  Actually, it’s the large banks that do a better job of making funds available to entrepreneurs.   They do it through credit cards and home equity lines.  Some might even be considered sub-prime because most struggling entrepreneurs are unbankable.  We are the un-touchables in a caste system of capital allocation.  We smile and pay the 24% annual interest rate because we can’t get credit anywhere else.  If we can just keep the doors open another month, we will change the world.  But bankers get all worked up if they see that you actually need money, or that you have taken risks.  Sorry – but I believe “risk-taking” is part of the job description for an entrepreneur. 

And now they are tinkering with that precious source of small business capital in the name of consumer protection.  I think I’ll move to Amsterdam and open a coffee shop. 

OK  – that’s the Treasury department.  How about the SBA?  Shoot, if the federal government can subsidize the automakers to the tune of $7,500 per car to make electric vehicles, or ethanol producers 50 cents a gallon to disrupt the grain markets and make it look like we are doing something about the energy problem – surely the federal agency tasked with helping small business must be a wellspring of help and hope for their small business constituency. 

First, the report card for Treasury and the SBA Combined – the article included a chart of Total Outstanding Small Business Loans for 2008 to 2010, sourced from the Small Business Administration’s Office of Advocacy, March 2011. 

2008    $712 Billion

2009    $695 Billion

2010    $652 Billion 

That only confirms my suspicions, my own experience, and the stories from a multitude of small business owners who sometimes have to scramble to survive.  New lending ain’t happening.  Just the opposite – debt is being paid back.  If recent trends continue, small businesses will be lending the banks money in about 15 years. I give the federal government a grade of “P” – not for “Passing” but for “Pathetic.” 

With all the money the federal government is spending on other things that perhaps have lobbyists – (I live among these people near Washington, D.C.  I can see what goes on.) – they can’t find a way to spend any of it in a way that actually helps small businesses survive and thrive?! 

Rather they’re putting up barriers to make it tougher on us.  It’s because we don’t have a voice, and they don’t have anyone writing or implementing the laws who have a clue about what it means to be an entrepreneur.  Shame on them!

 Back to the fund: the WSJ says “Detractors of the fund say some banks are applying for money to refinance outstanding government debt rather than to boost their small-business lending.”   Unintended consequence?  Or maybe not?

Here’s the link to the WSJ article