Kent Chamber of Commerce members were urged to get their financial records in order, build relationships with lenders before they need money and use free advisory resources during the chamber’s June 11 “Capital Access” membership luncheon.
The event featured panelists Taran Hornby of the Small Business Development Center, Nam Nguyen of WaFd Bank and Carmen Goers of Washington Trust Bank. Dee Scott, a chamber board member and managing broker at Dee Dee Real Estate, moderated the discussion.
“When you are in business, it is important that you understand your market and you have to learn how to pivot,” Scott told attendees.
Panelists said lenders generally want to see clear financial records, including personal and business tax returns, profit and loss statements, debt schedules and a clear explanation of how borrowed money will help the business grow.
Nguyen said business owners should know their numbers before approaching a lender.
“If you don’t know those numbers and you have to rely on your accountant, you’re already in a pretty bad situation,” Nguyen said.
Goers said business owners should be prepared to explain what they are trying to accomplish, whether that means buying equipment, adding staff, covering inventory or managing working capital.
She said lenders also look at the story behind the numbers, including cash flow, credit history and whether the business has room to repay debt if the market changes.
Hornby said being “capital ready” does not always mean borrowing money right away. She said some businesses first need to fix pricing, cash flow, bookkeeping, marketing or other systems before taking on debt.
“If you’re looking to the lender to fix your mistakes, that’s not why they want to lend money,” Hornby said. “They’re looking to increase the value of your business, not fix your problems.”
Panelists also warned that growing too quickly can strain cash flow, damage customer relationships and hurt a business’s reputation if owners do not have the staffing, equipment or systems to meet demand.
Hornby said businesses should grow in a controlled way, then pause to build infrastructure before expanding again.
The panel also discussed accounts receivable, seasonal business cycles, credit scores and the difference between reducing taxable income and showing enough income to qualify for financing.
Goers said business owners should build a team that may include a banker, CPA, tax preparer and financial adviser, depending on their goals.
Panelists encouraged business owners to use local resources such as the Kent Chamber, SBDC, SCORE mentors and bankers who understand small business lending.
Nguyen said business owners should begin “dating” their bank before they need capital.
“When your business is doing well, when you have good cash flow, when everything is doing good, when you don’t need that extra funds is when you want to start having that conversation with your bank,” Nguyen said.
Panelists also warned business owners to be cautious of online loan offers, especially those promising fast approval with little information required.
Goers said many online offers promising quick business loans are “frauds” aimed at collecting personal information from applicants.
Hornby said grants to start or fund businesses are rare outside special programs, noting that SBDC advisers share grant opportunities with clients when they become available.
The luncheon was introduced by Ronnie Jones, the Kent Chamber’s new business engagement manager, who said he wants to help more Kent businesses connect with the chamber.
“I want every business in the city of Kent (to be) on with the chamber,” Jones said.
Video
Below is an edited video of the luncheon, as shot/produced by Scott Schaefer (running time ~1-hour, 8-minutes):
