BusinessReport.com

For nearly 13 years, Cathy Scott ran her accounting business like a “mom and pop” until she decided it was time to step it up.

Scott had her sights on a second office on Jefferson Highway and was eager to hire and train staff before tax season. With that in mind, she set out to find the money to realize her vision.

“I was looking for financing options that would come quickly, as opposed to some loan process that could take 30 to 35 days before you get any response,” she says. “With the Community Express Loan, I had an approval in three days. It was excellent in timeliness.”

Scott found her opportunity with a Small Business Administration [SBA] program that let her borrow up to $50,000, which helped her avoid taking several smaller loans or one insufficient loan. With working capital, Scott hired an assistant and an accountant and set up the new location to attract a new larger clientele with accounting and wealth management.

Every move, she says, is positioning her business for growth in Baton Rouge’s more competitive market.

“It feels wonderful,” Scott says. “And it’s a little scary because I’m out here, and I’ve got to continue working to make it happen.”

Once approved for the loan, all she had to do was submit final paperwork and the money was quickly wired to her bank account. The loan put her on the path to becoming a small business success story, allowing her to join the Baton Rouge Area Chamber to network for potential clients.

“I’m pleased with the way things are going, but now I’m looking for the full realization of this dream,” Scott says. In three to five years, she hopes to own her own complex instead of leasing.

While funding worked out for Scott, money concerns are common for startups and existing businesses. It’s a scramble to find ways to afford equipment, expansion or diversification, but local lenders say loans and services are available despite the national credit crunch.

Gregory Spann, director of the Small Business Development Center at Southern University, says small business financing typically relies on how much money is needed. There are several options available, including traditional banks, SBA loans and Seedco Financial, a program unique to the Capital Region that primarily assists women and minorities.

Typical obstacles are lack of equity to invest in the business, credit problems, lack of expertise for the type of business desired or lack of management experience. But Spann says they are among many services in the area available to assist in these areas, as well as to help assess needs and funding options.

Borrowing is harder for startups because they have no track record, but other factors can make them more interesting to lenders, such as the applicant’s experience, cash investment and projected cash flow in the concept, as well as the amount they want to borrow.

“If a person has a viable business and they have the equity or collateral capacity, I think banks would be interested in finding ways to finance them,” Spann says.

At New Orleans-based Gulf Coast Bank and Trust Co., Marketing President Gary Littlefield says commercial lending is their bread and butter, and they’re going after a bigger slice of the action by expanding services. A full-time SBA lender was recently hired and new partnerships established with the state’s Small Business Development Center and the business incubator of the Louisiana Business and Technology Center, both at LSU.

The bank is also working with Ted Ledet, program manager with BIDCO in New Orleans, to tailor loans for startups with a good business plan or considerable experience.

“I’ve done more startups lately than I’ve done in the last five years,” Littlefield says. “We’re a common-sense lender when it comes to working with existing, as well as, new businesses.”

BancorpSouth President Larry Denison advises traditional lending institutions have always been cautious when it comes to small businesses, particularly startups, because of their high failure rate. The credit crunch has further tightened the market unless borrowers have significant capital.

Spinoffs are a hot spot, he says. Established small businesses are taking advantage of area market opportunities like investing in real estate as prices become more affordable.

“Everyone knows it’ll come back if you have the money to invest in it now,” he says. “Entrepreneurs are taking advantage of opportunities for potential profit, which are especially so for people well-capitalized and positioned in the market.”

Joanie Dubroc, South Louisiana business executive at Regions Bank, agrees.

“It’s a good environment for expansion,” she says. “A company with a good history and business model can definitely take advantage of many financing and cash management solutions we offer. We are certainly entertaining deals that make sense and have always had a sound credit policy.”

Small businesses with up to $10 million in annual revenue are healthy niches, Dubroc says.

Loan demand is so healthy, the bank recently hired three new branch business bankers in the Capital Region to focus on microloans [businesses with $2 million in annual revenue] and small business loans [revenue from $2 million up to $10 million a year]. They also promote SCORE [Service Corps of Retired Executives], which provides free small business counseling.

“There is tremendous opportunity in the micro segment because I don’t think those folks are used to getting a lot of attention,” Dubroc says. “It’s not just about lending, but a focus on the entire relationship.”