Financing for businesses and nonprofits: Is there anyone out there?

Recent months and weeks have seen downsizing, bankruptcy or near bankruptcy, takeovers, acquisitions, mergers, shakeups and negative rumors about such venerable financial institutions as American Home, Countrywide, Lehman Bros., Merrill Lynch, AIG, Morgan Stanley. Banks have tightened their credit boxes - no more 85-90% loan to value lending - now its potentially back to 60-70% maximum. Banks and nonbank lenders alike don't want to make commercial loans they can't lay off in the market and nobody is taking loans to market. Overzealous headlines are even declaring investment banking dead! What does all this mean for the average small business or not-for-profit out there? Are the credit doors shut? The short answer is no - the doors are still open; there's money out there. It means more careful scrutiny by lenders, less risk taking by lenders, and more work for borrowers to prove their creditworthiness. But- at the end of the day- businesses and not-for-profits can access the funding they need to operate, expand and thrive in their operations. The banks, the non-bank lending institutions and the government related lending sources are still in business - albeit being more careful and circumspect. The rates are still relatively low. Certainly, for capital transactions, real estate prices are low enough to make it desirable to invest in a facility-providing location and cost stability, and opportunity to grow equity. Borrowers will need to rely more than ever on relationships built up with commercial lenders. Those relationships will enable lenders to trust in the viability of your entity and the probability of your success (and ability to repay the loan). Risk minimizing will be the vogue, whether it be extra collateral or providing the conventional lender with subordinate financing from a government related source. The latter are prepared to step up to the plate and increase the comfort level of conventional lenders. Programs such as the SBA 504, NY JDA, New Market Loan Fund, SBA 7A, HUD, EDA and others minimize the risk for conventional lenders because of their willingness to take second lien position. Companies and nonprofit entities will need to check their credit profiles before approaching lenders. Clean up problems. Be prepared (upfront) to explain credit issues so they don't become mountainous problems for the lender. And make it easy for the lender by submitting complete paperwork. Given all these parameters, bottom line is: don't be afraid to seek financing for your project or expansion. Just have all your ducks in order first. Approach lenders who know you and make it easier for them to consider you with complete paperwork, demonstration of ability to repay the loan, and offers of appropriate collateral. Be willing to consider additional, subordinate government related financing to make the transaction more palatable to the conventional lender. Is there anyone out there willing to lend to your business or not-for-profit? Absolutely! Roslyn Goldmacher is a licensed real estate broker in N.Y. as well as president/CEO and founder of the Long Island Development Corp. & The Greater N.Y. Development Co.