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Micro-Business loans increased in 2001
American banks increased their micro-business
loans by 10 percent in 2001, according to a
recent report issued by the
Office of Advocacy
of the
U.S. Small Business Administration (SBA).
The report, “Micro-Business Friendly Banks In
The United States,” is designed to help small
firms in their search for capital. It identifies
banks in each state that are
micro-business-friendly in their lending of
amounts under $100,000.
“This report is a tool for small firms seeking
capital to help identify micro-business-friendly
banks in their state,” says Thomas M. Sullivan,
Chief Counsel for Advocacy. “Interestingly, it
appears that much of the growth in micro-loans
has been due to the promotion of credit cards by
major banks and finance companies. That is not
surprising since Office of Advocacy research
shows that many entrepreneurs finance their
businesses with credit cards.”
The 10-percent increase in the number of
micro-business loans compares to a 6 percent
increase in loans of $100,000 to $250,000 and a
7 percent increase in loans of $250,000 to $1
million. The dollar value of small business
lending increased as well. Micro-business loans
outstanding, as of June 2001, increased by $5.4
billion to a total of $126.8 billion.
What You Can Do
If you’re looking for financing for your
micro-business, here are some steps you can take
to create a lasting relationship with a friendly
lender.
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Research banks
that cater to micro-businesses owners. Start
with the report “Micro-Business Friendly Banks
In The United States,” which ranks small and
large micro-business-friendly banks in each
state. You can find it on the SBA’s Office of
Advocacy Web site at
www.sba.gov/advo.
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Ask your
accountant, attorney and other business
associates which banks they recommend.
Investigate community banks and other financial
institutions close to your place of business.
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Establish a
business relationship with a bank. Open
business checking and savings accounts. Get a
business credit card through the bank.
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Manage your
accounts wisely to maintain your credibility.
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Show that you
understand the banking relationship. Personally
meet a banker. Explain your business and
your industry. Present your company’s financial
statements and your business plan. Ask for
advice about cash flow, collecting accounts
receivable and other money matters.
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Talk to your
banker about the different types of financing
available for your micro-business, such as
short-term loans or lines of credit.
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Apply for
financing when your business is in good
financial shape. Establish a credit history
for your business by requesting a small loan or
line of credit and paying it back quickly.
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