Being Bankable

Being Bankable

By Eugene S. Robinson


Because being broke? Not even close to being a joke.

By Eugene S. Robinson

The coronavirus and the subsequent shutdowns — and in some cases re-openings and re-shutdowns — have had the totally expected outcome of being tough on business. Very specifically small businesses. Even more specifically than that, small businesses owned and operated by people of color.

But the best/worst part? We’re still not out of the woods when it comes to the possibility of the uninterrupted flow of business in the future so how to handle not getting laughed out of the joint when it comes to asking a bank for a bridge loan, is a must.

So how must you best position you and your business to make it through the rocky shoals of the shutdown while convincing a bank that it’s not just a case of good money following bad? We asked and discovered precisely how.

“It’s really important to be sure that your bank has lots of types of financial instruments and understands the type of business you’re building, because not all banks take every type of risk,” said Candice Matthews Brackeen, a General Partner and founder of the venture capital firm Lightship Capital. The Cincinnati, Ohio firm has created a $50 million fund to invest in underrepresented founders in the Midwest, from racial minorities to the LGBTQ and disabled communities.

“There are lots of Wall Street banks that don’t fund venture. So you’ve got to find something that is going to be able to have a working line of credit to buy something in, say, manufacturing. Not all banks are one-size fits all, you’ve got to figure out what works for your type of business.”

Also since small business loans are a solid way to let you expand your business, provide capital for expanding your business or consolidating debt in order to expand — counterintuitive during COVID we know but stick with us — you should know after you get to the bank, what they’re looking for. Because this has not changed much at all: capacity, capital, character, collateral, and conditions.

In a nutshell: can the loan be repaid (capacity), how much cash do you have on hand to pay it off (capital), does your history and references suggest you will repay (character), if it can’t be repaid do you have other available assets (collateral) and, finally, what the climate is like for business when you’re asking (conditions). On the one hand in the middle of a pandemic conditions might seem bad. On the other hand? It’s bad for everyone.

So once level set for the prevailing conditions and understanding that business will still go on, this is most assuredly what will help you over the banking hump.

“There are a lot of banks making lots of money,” Brackeen said. “And sharing profits with what communities they decide they will go to. There is kind of a big push…” Which is precisely why with your ducks in a row you should be ready to go if you just need a little help making it from here to there. COVID or not, businesses will not die.