Small and medium business owners will soon have greater access to a larger pool of potential lenders. A new U.S. Small Business Administration (SBA) initiative: LINC (Leveraging Information and Networks to access Capital), is working to get entrepreneurs a date with lenders nationwide.
“One of things we’ve seen as a challenge to small businesses is accessing a network of lenders,” says Chicago-based Robert Steiner, District Director, SBA, Illinois District. “They may have a local lender who they do business with every day. The idea is that downstream, what we will see is lenders across the state and country—so that even if a borrower is in a rural area—there will be enough of a geographic range so there will be lenders who see the opportunity.” The goal of the program is to get small and medium businesses the capital they need to succeed.
Using Technology to Access Capital
Borrowers can register at the SBA website. Once an account has been set up, you will be asked to answer 21 key questions, including the relative size of your business, type of business, number of employees, the type of financing you are seeking, the amount you are looking to borrow, and how you would use the funds.
“Once they submit,” says Steiner, “the information goes to all lenders and provides a snapshot of their business, cash flow and other metrics that lender can use to see if it’s an opportunity that a lender wants to explore further or not. A lender will respond within 48 hours either saying, let’s have a further conversation or not, but here are some resources such as other SBA resource partners.”
Currently, the LINC system in Illinois is in pilot phase and has been implemented for just three months. The pilot phase has nine to 10 lenders participating, including micro lenders and certified development companies. Phase two of the Illinois program will integrate commercial SBA lenders. “We kept the borrower base relatively small so we can manage the process,” explains Steiner.
Nationwide, LINC has participating lenders in all 50 states, the District of Columbia and Puerto Rico. According to SBA Administrator Maria Contreras-Sweet, these lenders have made a combined 42,000 loans totaling more than $17 billion since 2009.
Getting Ready to Qualify
While the LINC program is gearing up across the country, business owners can prepare themselves for potential lenders. The SBA has resource partners such as women’s small business development centers and local SCORE chapters that provide pro bono business counseling and consulting services.
Doug Nohe, Chapter Chair of SCORE Chicago suggests, “See an advisor, a mentor, someone who can help you through what the requirements are so you can qualify and if you are not going to qualify, then they can help you get to the point where you will.”
While it is easy to fill out the online form, make sure you have prepared as many of the components as possible to increase your chances of securing financing. Critical factors include personal and business financial statements, tax returns, asset based information, inventory terms, payable terms, debt service coverage, your personal debt score and overall debt to income ratio.
Once you have prepared the best possible case for borrowing, the SBA LINC program helps harness the power of the Internet to attract as many lenders as possible. “We are getting smarter about how we leverage technology for access to capital for borrowers and lenders,” says Steiner. “The real endgame is helping businesses connect with lenders.”
SooJi Min is a freelance writer and nonprofit executive based in Ann Arbor, MI. She has written on small business topics for Crain’s, Imagination Publishing and The University of Chicago Booth School of Business.