ChristieBoutain's avatar
Where’s the Money?

Finding and understanding financing options for your business is not always easy.  There seems to be options on every corner and every swipe on your smartphone.  How do you know what is best and where to find it? 

The first thing you need to do is look at your current banking relationship.  Do you have a well-established relationship with a bank that you trust?  Do you have a banker that is reliable and available? 

If you answered yes, that’s fantastic!  Spread the word.  I’m sure there are other business owners that could benefit from working with a trusted partner. 

If you answered no, then you’ve got a little work to do.  Ask your accountant, financial planner, or attorney for a banker you can call.  Go in and have a conversation.  Learn about the values of the bank and banker.  Is there a synergy between your values and business goals?  Any relationship at the onset requires an investment of time and energy.  Be prepared.  Have your financial statements in order.  In the end, you will be glad you invested the time.

Your banker should be one of your trusted resources and advisors.  They are there to help you navigate the financial options and services available to you. 

When I get asked about financing options, my first question is to ask what it is for.  The purpose of the funds should dictate the type of financing.  Short-term financing like a line of credit should be used for short-term needs such as working capital or inventory.  Long-term financing like a term loan should be used for long-term needs such as equipment purchases or real estate acquisitions.  Helping the banker understand what you need and why will help determine what’s best.

Some of the most common options include:

Conventional bank loan.  This type of financing is offered by a financial institution and will require collateral along with a proven ability to repay the loan.  It will require a certain percentage down payment on the asset(s) being acquired or a discounted value placed on existing assets owned by the business. 
SBA loan.  This type of financing is also provided by a bank and is guaranteed by the Small Business Administration.  It is a way for banks to offer flexible financing terms to businesses beyond what might be available on a conventional bank loan.  It will typically allow for less down, longer amortization or less collateral.
Hard money loan.  This is typically an asset based loan financed by private investors or companies, has a higher cost to acquire, but can be easier to acquire than a conventional bank loan. 
Crowdfunding.  This is a way to raise funding online and has similar characteristics of a hard money loan.
Credit card.  This may be a useful funding source for smaller financing needs and can have a higher cost of interest to acquire than other financing options. 
Friends and family.  This is not always an easy ask, but if done properly can be another alternative source of financing.  Consider formalizing an agreement so both parties know what is expected. 

Whatever option fits your needs, be disciplined about the repayment.  Just because a longer amortization is provided doesn’t mean it matches short-term or long-term business growth goals.  Maximize flexibility when you need to and build equity when you can.  Communicate with your banker on your goals so the right structure can be set. 

In this commoditized era of banking, it really comes down to the service provided including, but not limited to, the responsiveness and creative structuring options provided by your bank.  It is not a one-size-fits-all or even most.  Find your trusted resource and you will find the right financing options that best fit your needs and business goals.

Christie Boutain has a passion for working with business owners and helping them build successful enterprises, strong communities, and long-lasting relationships with trusted resources.  She has been in banking for over 20 years and is a commercial lender with Gateway Bank in Mesa.  She has over 15 years of experience in commercial and industrial lending, commercial real estate lending, equipment finance, deposit and treasury management, and strategic planning.  Born and raised in Minnesota, Christie, her husband and their two children moved to Arizona in 2016 and enjoy the sunshine, warm weather, and all the valley has to offer.