There's been plenty of talk about how loans for small businesses will help spur the economy, but how and if small businesses get these loans comes down to the community banks that do the lending.
With the Small Business Administration (SBA) encouraging community banks to lend, it is now more important than ever for small businesses to make connections with their local bankers—a step that local LGBT chambers are helping small businesses take.
The Independence Business Alliance (IBA), the Philadelphia affiliate of the National Gay & Lesbian Chamber of Commerce®, has taken strides to help its members become familiar with their community banks.
In its educational programs, IBA has made sure to include representatives from member banks who have presented information to business owners about financing options for their businesses and cutting business costs.
Banking members are also well represented at other chamber events and make themselves known to the chamber's many members and LGBT consumers, said IBA president and Mid-Atlantic/Northeast Regional chair of the NGLCC's Council of Chambers and Business Organizations, Bill Gehrman.
"Business is dependent on cash flow and financing, so having a good relationship with your local bankers can be critical to success," Gehrman said. "Having someone to ask about different products and services to meet your business needs is an important partnership."
The Washington, D.C. affiliate chamber of the NGLCC, the Capital Area Gay & Lesbian Chamber of Commerce (CAGLCC), has several financial institutions represented in the chamber, and through the organization's monthly speed networking events, chamber members can meet with bankers on a regular basis, said Kenneth White, CAGLCC president and vice president of branch operations and business development at Signal Financial Federal Credit Union.
CAGLCC members also have the opportunity to get familiar with their community banks at the Mayor's Economic Summit, where representatives from financial institutions discuss everything from financial literacy to business planning.
To familiarize chamber members with the SBA's small business programs, the CAGLCC hosted a luncheon with the SBA, sponsored by member banks.
The SBA's loan guarantee program is designed to encourage more lenders to help small businesses by guaranteeing up to 85 percent of the loan principal to the lender if the borrower fails to pay it off. With this guarantee, small business owners should be more encouraged to get to know their community bankers.
The SBA's loan programs may be in place; however, financial institutions provide loans based on their own unique credit policies, which is another reason that business owners should become familiar and talk with their bankers about what their needs are and what the banks offer, White said.
"It becomes increasingly important [to become familiar with community bankers] if you are going to rely on or need financing from your financial institution, and if you think you're a business that would need to utilize the SBA program. Although the program itself is cookie-cutter, the way financial institutions use the program is not," White said, adding that some banks may be less likely to provide loans to start-ups or to restaurants, or other types of businesses, depending on its policies.
"It would really be easier to have that dialogue early on to find out how your particular financial institution is going to partner with the SBA," White said.
