Issue link: https://www.massageandbodyworkdigital.com/i/68005
FINANCING YOUR VISION Securing a Loan During a Credit Crunch Credit is the oil that lubricates the machinery of most businesses and professional practices. Whether it's a loan to buy inventory or supplies, support renovation or expansion, a capital purchase, or as a means to meet operating expenses, almost every business depends on credit at some point. The upheaval in today's economy has resulted in a credit crunch that has made it tougher than ever for small business owners and professional practitioners to swing a loan. "I'm not so sure that's a bad thing," says Eileen Laird, massage practitioner and author of 101 Things Every New Massage Therapist Should Know (FYB Publishing House, 2006). "It's so easy to get in over your head with credit that great caution should be used before taking out a business loan." Still, there are legitimate and often urgent reasons why an MT may need to apply for a business loan. For those in the know, there are enough options available to make the task a little easier. Money may be tight, but business loans are being made every day to those who know how to ask. If you're planning to look for a business loan, here are some choices, along with hints on how to greatly improve your chances of coming away with the money you need. BANKS The first place that many therapists turn to when they need a business loan is their local bank. That's why it's essential to build a solid business relationship with your bank well before you need to ask them for money. Allowing your bank to become familiar with your practice and how it's progressing sets the stage for the time when you need to ask for a loan. For relatively new businesses, most experts like the time-honored system for establishing good credit. "Take out a relatively small loan, even when you don't need it—say $4,000 or $5,000," says certified public accountant Tom Normoyle of Huntingdon Valley, Pennsylvania. "Put that money in the bank where it will draw a little interest. Then, a few months later, pay off the loan in full, plus interest. Now the bank knows you, and you have a solid credit history." Even after establishing a relationship, some credit seekers meet with frustration when the bank turns down their loan application. Most bankers agree that this is usually because the applicant has failed to come prepared with the information a lender needs to make a positive decision. "How to find the money to finance an expansion or acquisition is the last thing that many business owners think about when they plan a project," says James G. Marshall, vice- president, Fulton Bank of Lancaster, Pennsylvania. "It's best to have a team lined up behind you when you begin to plan a major financial move—and your bank should be a member of that team." How should you prepare for a meeting with a bank loan officer? Marshall suggests you come armed with: • Accountant-prepared financial projections and cash flow analysis. • Financial statements for your existing practice. • Information on the background and experience of owner(s). • Marketing feasibility study for the project. • Copies of leases, bills, or other financial commitments the bank needs. "With this information," Marshall says, "the bank can give proper consideration to your loan application. If you're thinking about acquiring a competitor, it's important to have a clear understanding of the value of every asset in your acquisition target. Banks or commercial lenders are more likely to look favorably on a deal that has already been inventoried and valued by individual asset. Before going to a lender, you should count, confirm, and value every single hard asset you are able to identify, including all operating equipment, furniture, and fixtures. visit massageandbodywork.com to access your digital magazine 23