Candid advice from CEOs on how to seek financing
A roadmap of where to go, when, and what to consider

Before business owners even apply for a specific loan or financing package, they have to first research their options to figure out what are their options and what is the best fit. But where to go? What to consider? The CEOs and financial institution executives provide tips on how to start looking for financing.
1. If you are a start-up, new business with no track record, it will be difficult to obtain a loan. Try family and friends or government-backed programs first
“As a start-up business, try to first seek capital from friends and family, basically anyone who can lend you money. Then show us how you have actually utilized that capital, what accomplishments you’ve made. We need to hear the “what I’ve done” story. A strong track record goes a long way.”
- President and CEO of Broward Bank of Commerce, Keith Costello
“One of the biggest challenges for the small business owner is finding financing, whether the business is in start-up mode or looking to expand and grow. The Small Business Administration (SBA) is a great source of financing, particularly for start-up businesses and those in riskier industries.”
- President and CEO of Corning Credit Union, Gary Grinnell
“If you are a start-up business or one that has been negatively impacted by the economic downturn, look for banks that understand your business and the area. Lenders with local knowledge can relate and understand the challenges the business has faced; and, in some cases cank work with government programs that are designed to help supplement business lending to borrower’s that do not fully meet conventional underwriting guidelines – for example the Small Business Administration (SBA), United States Department of Agriculture (USDA), and the Farm Service Agency (FSA). These government agencies and programs help banks approve requests of non-seasoned businesses or those that may need to improve cash flow.”
- President and CEO of Pendleton Community Bank, William A. Loving, Jr.
2. Talk to other business owners and members of your community to identify a pool of potential lenders
“Ask other local business people—word of mouth. If another businessperson you know and trust is pleased with his or her banking relationship, check out that financial institution. It is a great way to narrow the field; at least the place made someone happy.”
- President and CEO of North Island Credit Union, Stephen O’Connell
“The quality of business lending really varies community-by-community, institution-by-institution. What I mean by that is: there’s no one-size-fits-all answer – sometimes a community bank is the better choice in a given community, in other towns, the local community bank might not even lend and there may be a strong credit union that outshines even the big bank. Business owners can find out which financial institutions are active and experienced lenders by referrals and recommendations from reputable organizations and individuals. Some examples of such include: the city’s Chamber of Commerce, Small Business Development Centers, SBA local offices.”
- President and CEO of Gesa Credit Union, Christina Lethlean
3. All things being equal, if you can get a traditional loan at a local bank or credit union, do that before trying non-bank lenders
“First, I advise speaking with at least 6-10 banks before ruling out a traditional bank loan – at the end of the day, if you qualify for a bank loan, get one. It’s often the cheapest and most reliable business loan – after all, banks are heavily regulated.”
- CEO of Opportunity Finance Network, Mark Pinsky
“If you need a loan, start by talking to community-based financial organizations, such as credit unions or community banks. We are more vested in the community and local businesses.”
- President and CEO of Texas Trust Credit Union, Jim Minge
“Community banks are the largest lenders – we make 50% of all small-business loans. Additionally, we provide personalized service. Think of it as “custom credit” – we’re smaller than large banks, service small to mid-sized businesses, and take the time to get to know the borrower.”
- President and CEO of New Resource Bank, Vincent Siciliano
“Because we are not-for-profit, credit unions operate to serve the best interests of our members. This makes us uniquely qualified to assist the truly small local businesses that might be considered too small to be “profitable” by some other lenders.”
- President and CEO of Redwood Credit Union, Brett Martinez
Go Local
“In most community banks, decisions are made locally and quickly. There is little bureaucratic interference between the small business owner’s request and the bank’s response. A lot of the larger banks use a credit scoring model to consider small business loan requests, or credit decisions are made in another city or state.”
- President and CEO of Lone Star Capital Bank, Danny Buck
“You should also look for a bank near your place of business. Banks located in your community are more familiar with the community and better able to assess a business’ qualifications.”
- CEO of Community & Southern Bank, Patrick M. Frawley
“The most important factor is to find a local lender that you trust and with whom you can build a long-lasting relationship. Take some time to shop around for an institution that truly understands your business.”
- President and CEO of Corning Credit Union, Gary Grinnell
“Another key consideration [in selecting an institution] is whether approvals are made locally, in-house (as opposed to say, outsourced to another office or even another country).”
- President and CEO of Travis Credit Union, Patsy Van Ouwerkerk
4. Be picky and do your homework - lenders are not all the same. Business owners often worry about being evaluated as a borrower, but it’s equally important that you are evaluating lenders critically
Look for a bank that has the right specialization in both commercial lending and in your industry
“While we do mortgage lending and personal lending, we are primarily a commercial lending institution. We’ve developed industry expertise in the mining, timber markets and related markets, as we serve many customers in this segment...”
- President and CEO of Grand Rapids State Bank, Noah W. Wilcox
“We offer taxi medallion loans here in San Francisco - we are only 1 of 2 credit unions doing these loans in our market… We provide loans of approximately $200,000 for taxi medallion owners, and help them understand their financial situation, as many taxi businesses run on cash and do not report financial statements.”
- President and CEO of San Francisco Federal Credit Union, Steven Stapp
“Our bank is unique because we really do specialize in making small business loans under the Small Business Administration. We have specialized in using that program since we opened our doors in 1986. We became one of the first lenders in the Dallas Ft Worth metroplex to be given the distinction of Preferred Lender under the program, which meant we were licensed to do our own underwriting as opposed to sending the loan to the local SBA office”
- Chief Operating Officer of Bank of the West, Cynthia L. Blankenship
“When seeking a loan and choosing a financial institution, think about the long-term relationship your business might need. You don’t want to outgrow your financial institution or find one that might not fit your needs a few years from now. For example, if your business is currently at 5 employees and generating $1 million in revenues today but you anticipate it to grow immensely to 500 employees and $50 million of revenue in 5 years, a small local credit union or bank might not be the best fit for you.”
- President and CEO of San Francisco Federal Credit Union, Steven Stapp
Evaluate the experience of your bank’s lending team
“Once you have a short-list of potential banks and credit unions, look at the experience of their lending team. Is their team comprised of loan officers, credit analysts, and other experienced commercial bankers? Does the institution have a track record of loan growth over the years?”
- President and CEO of Gesa Credit Union, Christina Lethlean
“Be able to recognize a loan officer who will be able to structure your loan package in a way that will be beneficial to you and provide a long term solution to your business. Evaluate the experience level of the loan officer you are working with in order to complete your loan request.”
- President and CEO of Travis Credit Union, Patsy Van Ouwerkerk
Look for the best overall loan package - don’t be solely fixated on interest rate and cost
“Covenants are extremely important – a borrower should watch out for strict covenants (e.g., debt service coverage) or limits on uses of funds (for example, some restrict dividends paid to owners). In addition, some forms of financing require different amounts of collateral you have to pledge.”
- President and CEO of Newtek Business Services, Barry Sloane
“With respect to business lending specifically, we have more flexibility to structure a loan to be more favorable and flexible to our customers. For example, some banks may offer a lower rate, but with terms that include prepayment penalties that would lock you in over a specified period of time, even if you have been able to pay off the loan earlier than expected.”
- Senior Vice President and Chief Credit Officer of Meriwest Credit Union, Mark Antonioli
5. When using non-bank lenders in unregulated industries, proceed with caution and be especially diligent
“There has been criticism from some about merchant cash advances, and some of it is warranted because it is an unregulated industry and there certainly are less reputable providers out there. As such, it’s critical to find the right financing partner. Specific tips for finding a provider with fair and sound business practices:
  • A direct lender that is licensed: one who is certified by the state government (typically by under the state’s Secretary of State Department. In California, it’s the Department of Corporations.
  • Make sure you are dealing with the financing source directly. If you do go through a broker, make sure the broker is a well-established one with a good reputation.
  • Membership of an industry association of merchant cash advance providers, the North American Merchant Advance Association (NAMAA), which includes the most reputable organizations.
  • A Merchant Cash Advancer should also be in good standing with the Better Business Bureau.”
- CEO of American Finance Solutions, Scott Griest
“No one should borrow money without understanding the full terms and conditions – especially with non-bank lenders (who are often times in unregulated markets). Obtaining a clear understanding is difficult, even for those like myself who have spent many years in the industry. Don’t be afraid to get help from qualified experts and organizations – go to your local SCORE office or small business development center and ask them to look over your loan agreement with you.”
- CEO of Opportunity Finance Network, Mark Pinsky
“First and foremost, the most important question is who is the counterparty? Are they in the business of making loans? How long have they been in operations? Are they credible – do they have relationships with other reputable institutions? Are they a public company that has transparent information? These questions are particularly important to ask when evaluating non-bank lenders who are usually unregulated.”
- President and CEO of Newtek Business Services, Barry Sloane
6. Have a good understanding of how financing works, and don’t expect to have your cake and eat it too
“Small business owners should understand the difference between debt and equity – not just in general, but how it impacts bank-lending decisions. An average return on a loan can range from 4%-6% for a bank, which is nowhere near the 20%-40% return one could expect from an equity investment. As such, there’s less room for risk and failures to repay. We need to know how you will use your money and how you will intend to repay us.”
- President and CEO of Broward Bank of Commerce, Keith Costello
“Businesses need to understand the role of a bank in their operations. A community bank is not an equity partner. We provide money through loans for expansion, but there must be a clear purpose for each loan. Owners should fully communicate what they need (how large of a loan), what they need it for, and how they plan to pay it back.”
- President and CEO of GreenChoice Bank, Harold L. Sherman
“We would advise that a small business owner make the effort to truly understand growth capital. Many are comfortable with where they are currently but aren’t seeking new options to grow.”
- Co-Founders of Bolstr, Charlie Tribbett and Larry Baker
“Financing is definitely not one-size-fits all. Therefore, it’s important to investigate all the different types of financing out there. Borrowers should ask themselves the following critical questions to determine the right financing option for them:
  • How much financing are you seeking? Some potential customers are looking for upwards of $5 million, which non-bank lenders like us, at our size, are not able to provide. Those companies would be better off seeking a VC investment or a bank loan.
  • How easy will it be to obtain financing? What do you qualify for? Some might seek traditional financing through banks but actually don’t come close to qualifying; other times we encounter the opposite case – where some business owners seek alternative, non-bank financing from services like ours, but who can actually secure cheaper financing through a bank
  • What are the implications once you obtain financing? For example after securing venture capital financing, a business owner should expect pressure to grow quickly, to lose control of some business decisions, to have a clear exit plan. Another example, some how does a repayment schedule affect your working capital?
  • Are there niche providers who might be a good fit for your business size, stage, and growth? Lighter Capital serves a particular type of company at a particular stage, and we would not be good for many companies who could otherwise get more traditional financing such through a bank, for example.”
- CEO of Lighter Capital, BJ Lackland

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