Paul F. Goblet, Financial Advisor, NM SBIC

There’s no doubt that the foresight of current and past legislatures and governors has attracted equity capital to New Mexico businesses, especially in the technology sector.

While more companies could probably benefit from having additional equity capital on their balance sheets, outside equity investments are not for every business. Investors can be difficult to attract, and dealing with them can be time consuming and expensive.

So how does a small company obtain the capital it needs to grow, even at a modest pace?

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Leslie Hoffman, Director of Lending, ACCION New Mexico

Sheep ranchers Jerry and Lyn Brown of La Plata, N.M., were looking for resources to help take their small business to the next level.  The sheep herd represented more than a livelihood for the Browns; it was the one remaining asset the family turned to as a lifeline after Jerry was hurt on a construction job and then nearly killed in a random shooting. The Brown’s finances had suffered because of medical bills, but their commitment to their sheep ranch was clear.

The Browns turned to ACCIÓN New Mexico, a non-profit lender, for a $2,500 loan.  In spite of their financial challenges, the Browns were able to obtain financing because they scored well on the critical elements of a loan application.

ACCIÓN is a nontraditional lender that increases access to business credit, makes loans, and provides training which enable entrepreneurs to realize their dreams and be catalysts for positive economic and social change. Our lending considerations go beyond numbers. We seek hardworking and pioneering small business owners and emerging entrepreneurs.  We support their passion to succeed, learn, and make the right financial and business choices.
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Kim Blueher, Director of Lending, WESST Corp.

A few years ago a massage therapist came to WESST Corp. because she wanted to open a small office. She had a business plan and some excellent marketing ideas but not much else. She needed a small amount of money to purchase office furniture and equipment to set up her practice. What she needed was a micro loan – a small business loan to help get her business off the ground.

The massage therapist received her loan under the condition that she meet with one of our marketing consultants to help refine her ideas. She began taking classes, including a multi-week class called Marketlink that focuses on delivering a product or service to the marketplace. It wasn’t long before her sales skyrocketed from a few hundred dollars a month to a couple thousand per month. Recently she returned for another loan, this time so she could move the business to a larger location and hire other therapists.

Both the original start-up loan and the subsequent loan for expansion are typical of micro loans. Helpful when the funding needs of a business are small, micro loans range from as low as $200 to as high as $50,000.   Loans of this size are often difficult to find – applicants sometimes lack collateral, have suffered credit problems, or have no business experience.   If the business is new, banks may view the enterprise as risky. Those who have had credit problems such as bankruptcy or late payments will also have a hard time qualifying for a traditional loan. Micro loans are designed for all of these situations.
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Kim T. Blueher, Director of Lending, WESST Corp.

Asking for money is something no one likes to do.   Asking to borrow money can be just as difficult.  The outcome will depend on how prepared you are.

First, research the different loan programs available throughout New Mexico. It would be a waste of time to apply for a loan that doesn’t fit the requirements of your business. Conversely, it would be a shame to miss out on a loan program that is perfect for your company because you aren’t aware of it.

Make sure you understand words you may not normally use – words like assets, liability, net worth, gross or net profit, collateral, receivables, payables, amortize and depreciate. Having a working knowledge of these terms lets the lender know that you understand the financial part of your business.

Obtain your credit report. This document is one of the most important criteria that lenders evaluate when they are considering a loan request. It is essential that you look at your own report at least once a year to make sure that the information is correct. You can also learn your credit score, which indicates how well you have paid your debts. Many lenders will not approve a loan if the credit score is too low.
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F. Leroy Pacheco, Executive Director, The Loan Fund

People often ask, “What do I really need to get a loan?”

They have reviewed the various bank programs, surfed the Internet, talked to friends and attended seminars. They may be drowning in information but they are still unclear about what to do next. How, exactly, does one go about getting financing, without having to sign over the rights to a house, a car, or as the joke goes – a firstborn child?

It all starts with an idea. But it’s the planning associated with turning that idea into a viable business that is the most important factor and one of the keys to whether or not a loan will be awarded.

Before you talk to a banker, a venture capitalist or an alternative lending group such as The Loan Fund, you need to do some thinking.  Don’t worry about doing a full-blown business plan – yet. Ask yourself these seven questions. We will certainly ask them if you call us about a loan.

Is your idea a good one? You love it, but will anybody else?  Why would someone who doesn’t know you buy your product or service?

How are you going to reach your target customers? We often see plans that include “advertising” as the sole marketing tactic. There’s a lot more to marketing than advertising.
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